Anual keporE oElie

FEDERAL MARITIME BOARD and MARITIME ADMINISTRATION

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UNITED STATES DEPARTMENT OF COMMERCE

For sale by the Superintendent of Documents U S Government Printing Office wullinton 25 D C Price 25 cents paper ewer UNITED STATES DEPARTMENT OF COMMERCE SINCLAIR WEEKS Secretary Washington D C

FEDERAL MARITIME BOARD CLARENCE G MORSE Chairman BEN H GUILL Member THOS E STAKEM Member TAMES L PIMPER Secretary

MARITIME ADMINISTRATION CLARENCE G MORSE Maritime Administrator WALTER C FORD Deputy Maritime Administrator LETTERS OF TRANSMITTAL

UNITED STATES DEPARTMENT Or COMMERCE FEDERAL MARITIME BOARD MARITIME ADMINISTRATION Washington 25 D C October 211957 To The Secretary of Commerce FROM CAairman Federal Maritime Board and Maritime Adminis trator SUBJECT Annual Report for fiscal year 1957 I am submitting herewith the report of the Federal Maritime Board and Maritime Administration covering their activities for the fiscal year ended June 30 1957

CLARFNCE G MORSE

SECRETARY Or COMDIERCE Washington P5 D C To the Congress I have the honor to present the annual report of the Federal Mari time Board and Maritime Administration of the Department of Com merce for fiscal year 1957

Secretary of Commerce

111

CONTENTS

Fiscal Year Activities

Page INTRODUCTION 1 AID TO SHIPPING 4 Construction Differential Subsidy 4 Federal Ship Mortgage and Loan Insurance 6 Other Forms of Construction Aid 7 Operating Differential Subsidy 8 Aid to Vessels Over 20 Years of Age 9 Trade Routes 10 SHIP OPERATIONS 10 Demand for Ocean Shipping 10 Charters 11 General Agency Activities 12 Grain Storage 12 Port Development 12 Shi 13 Other Activities 13 SHIP CONSTRUCTION AND REPAIR 14 Nuclear Merchant Ship Program 14 Construction 15 Conversions 16 Technical Developments 17 Building Proposals 18 ShipRepair 19 SHIPPING STUDIES AND REPORTS 19 Special Studies 19 Ship Cargo and Labor Data 20 Labor Management Relations 20 MARITIME TRAINING 21 United States Merchant Marine Academy 21 State Maritime Academies 22 SHIP SALES AND TRANSFERS 23 Ship Sales 23 Transfers to Foreign Ownership andor Registry 23 PROPERTY AND SUPPLY 24 Shipyards 24 Terminals and Reserve Training Stations 25 Warehouses 26 Material Control Inventory and Disposal 26 Purchasing 27 ADMINISTRATIVE MANAGEMENT 27 Program and Defense Planning 27 Personnel 28 Organization and Methods 28 Security and Investigation 28 FINANCE 29 Financial Relationships With Contractors 29 Accounting 29 Audits 30 Internal Audits 31 Insurance 31 Notes and Accounts Receivable 32 Claims 32

V Page LEGAL ACTIVITIES 33 Legislation 33 Contracts 33 Litigation 34 REGULATORY ACTIVITIES 36 Conferences and Other Agreements 37 FreiForei 38 Freight United States Territories and Possessions 38 Terminals 39 Freight Forwarders 39 PROCEEDINGS BEFORE HEARING EXAMINERS 40 Final Decisions of the Board andor Administrator 40 Recommended Decisions of Hearing Examiners 42 Pending Proceedings 43 INTERNATIONAL MARITIME ArrAIRs 43

MUFRAWIN4111HU EXHIBITS 1 Balance SheetJune 30 1957 and 1956 46 2 Statement of Operations for the Years Ended June 30 1957 and 1956 48 3 Statement of Equity of the United States Government for the Years Ended June 30 1957 and 1956 49 4 Statement of Sources and Application of Funds for the Year Ended June 30 1957 50 NOTES To FINANCIAL STATEMENTsJune 30 1957 and 1956 51 SCHEDULES 1 Statement of Operations of National Shipping Authority for the Years Ended June 30 1957 and 1956 52 2 Statement of Operations of National Shipping Authority From Inception to June 30 1957 53

A Employment of United StatesFlag Merchant Ships as of June 301957 B Deliveries of New Merchant Ships During Fiscal Year 1957 5456 C Summary of Operating Differential Subsidy Agreements on June 30 1957 58 D Ships Approved for Transfer to Alien Ownership andor Registry and Flag fiscal Year 1957 58

EF MerchantNew Ship FleetsConstructionof the Worldon Juneas 30of June195730 1957 6059 G Cash and Approved Securities on Deposit in Statutory Capital and Special Reserve Funds of Subsidized Operators as at June 30 1957 62

Vi FISCAL YEAR ACTIVITIES Introduction Reorganization Plan No 21 of 1950 effective May 24 1950 abol ished the United States Maritime Commission and established the Federal Maritime Board and the Maritime Administration in the De partment of Commerce to perform the functions of the abolished agency The Federal Maritime Board is composed of three members ap pointed by the President by and with the advice and consent of the Senate The President designates one of such members to be the Chairman of the Board who also serves ex offacio as Maritime Admin istrator The plan transferred to the Federal Maritime Board the regula tory functions of the United States Maritime Commission and the functions with respect to making amending and terminating subsidy contracts and with respect to conducting hearings and making deter minations antecedent thereto under the provisions of titles V VI and VIII and sections 301 708 805 a and 805 f of the Merchant Marine Act 1936 as amended The Board in respect of the regulatory functions transferred to it by the plan is independent of the Secretary of Commerce In admin istering other functions transferred to the Board by the plan the Board is guided by the general policies of the Secretary of Commerce with respect to such functions The actions of the Board in respect of the subsidy functions transferred to it are final The Maritime Administration is charged with the administration and execution of shipbuilding shipping port development and other programs authorized by law Many of its actions are based on de terminations made by the Federal Maritime Board The Adminis tration carries out its functions under a delegation of authority from the Secretary of Commerce The Federal Maritime Board and the Maritime Administration during fiscal year 1957 continued to devote their resources to the ac complishment of their responsibilities under the maritime laws This legislation provides for the development and promotion of an Ameri can merchant marine sufficient to carry the domestic waterborne com merce and a substantial portion of the foreign commerce of the coun try capable of serving as a naval auxiliary in time of war owned by and operated under the United States flag by citizens of the United States and composed of the bestequipped safest and most suitable types of vessels manned by a trained and efficient citizen personnel Principally these efforts involved the administration of programs con cerning the 1 planned construction of new and replacement ships so phased as to meet the Nations current and future requirements 2 chartering of Governmentowned vessels from the reserve fleet to private operators to furnish sufficient tonnage at reasonable rates to agriculture and industry in the expanded traffic market 3 develop ment of new ship designs and variations thereof including those in volving nuclear propulsion as well as those for conventionaltype ships to assure continued technological progress necessary to an efficient and modern American merchant marine 4 administration of operating differential and construction differential subsidy insurance of loans and mortgages and other forms of Governmentaid programs designed by the Congress to effectively promote and assist the American mer chant marine and 5 improvements in management and efficiency of the agency In meeting the objectives of these programs the Federal Maritime BoardMaritime Administration continued to foster the basic prin ciples of providing for maximum private ownership and operation of the merchant marine with full initiative in its own development of the shipping business and the solution of maritime problems limiting Federal participation to the extent required to meet the countrys economic and national security needs and administering the coun trys maritime laws in an economical efficient and effective manner With respect to the ship construction program there was a con tinued increase in the number of ships placed under contract for con struction or conversion in United States shipyards Continuation of this program was essential to provide a modern balanced privately owned merchant marine capable of transporting a substantial por tion of the countrys commerce and assure the availability of a nucleus of ship construction knowledge and skills for utilization in event of mobilization The progress of this program is exemplified by the following 1 at the end of the fiscal year 1957 there was a total of 119 ships under construction conversion or on order in the United States shipyards providing in excess of 1250 million worth of work to the industry 2 contracts have been executed or are in process of negotiation with subsidized operators which will result in the replace ment construction of some 278 ships over a period of years at an esti mated construction cost of 3 billion 4 of these ships were under construction on June 30 1957 In connection with bareboat chartering activities the Federal Mari time Board authorized the charter to United Statesflag operators of up to 223 Governmentowned ships in the National Defense Reserve Fleet The Maritime Administrator subsequent to Board action al located 138 Liberty and Victorytype dry cargo ships to 27 different Americanflag operators The chartering of these ships plus those previously chartered furnished sufficient tonnage at reasonable rates to agriculture and industry in the expanded traffic movement of the year In addition the chartering of these vessels enabled the trans portation in United Statesflag vessels of a substantial portion con

2 sistent with the availability of United Statesflag vessels of the siz able tonnages involved in the aid programs of the Department of Agriculture and International Cooperation Administration and car goes financed under Export Import Bank loans This assured to the maximum extent possible compliance with respect to the 50percent participation of United States privately owned vessels in movements of foreign aid cargoes as provided by Public Law 664 83d Congress and the exclusive requirements as to the use of Americanflag ships in the movement of cargoes financed by Export Import Bank loans as provided by Public Resolution No 17 73d Congress With respect to ship design activities continued advance was made toward achieving a modern American merchant marine with in creased efficiency and economy of operations through the development and utilization of new ship and propulsion designs This progress was notable with respect to the following 1 completion by the Maritime Administration of contract plans and specifications for 4 prototype cargo ships the Clipper Seafarer Freedom and Bulk one Pipeline tanker was under construction and consideration is being given by a number of American ship operators to the utilization of variations of the Clipper Freedom Seafarer and the Bulk cargo ship design in future construction of ships under their replacement pro grams or under pending applications for ship mortgage insurance aid 2 development of a number of plans and designs by subsidized operators under their replacement programs and by applicants for Government aid covering a number of ships proposed to be constructed or converted including cargo passenger combination passenger cargo and trailer ships 3 development of plans designs and speci fications for the construction of the first nuclear powered merchant ship and 4 completion of the program of experimental conversion of Liberty ships The nuclear ship program was materially advanced during the year with the substantial completion of feasibility studies to determine economic and technical applicability of various reactor concepts es tablishment of the basic characteristics of the ship awarding of a contract for the design development and fabrication of a pressurized water reactor propulsion system which is to be utilized in the ship awarding a contract for the preparation of naval architectural and marine engineering contract plans and specifications for the ship exclusive of the propulsion plant and determination of the avail ability and capabilities of shipyards to construct the vessel At the close of the fiscal year plans were formulated to continue the tech nical engineering and scientific activities necessary to assure the commencement of construction of the ship during fiscal year 1958 and its completion during the winter of 195960 The current Liberty ship conversion and engine improvement pro gram was nearing completion with the fourth such vessel scheduled for completion in September 1957 This program involved the a installation of new propulsion equipment including steam diesel and gas turbines b installation of modified cargo handling gear

440403 58 2 3 and c modification of hull lines to increase speed Although evalu ation studies of these ships are to continue during their operation in regular North Atlantic service indications were that the objectives of the program were being met in terms of increased speed in excess of 15 knots compared with a former speed of 10 knots feasibility of ready upgrading if required in an emergency of some 1500 Lib ertytype ships now in the reserve fleet and providing the basis of development of new types of propulsion equipment In the matter of administering operatingdifferential and construc tiondifferential subsidy and other forms of Governmentaid pro grams continued emphasis was given to the negotiation of operating differential subsidy agreements providing for phased ship replace ments of subsidized operators fleets and contracting for Federal ship mortgage and loan insurance During fiscal years 1956 and 1957 new operating differential contracts were executed with five operators These contracts phis continuing contracts with 6 other operators provide for the replacement of 175 ships during the period 195777 at a total estimated construction cost of 19 billion In addition by the end of the year negotiations were in process or contemplated with six operators for the execution of new contracts or extension of old contracts providing for the replacement of 103 additional vessels at an estimated construction cost of 1 billion There were executed during the fiscal year 10 contracts providing Federal insurance of construction and mortgage loans made by private lending institutions to private ship operators for the construction or reconstruction of 11 vessels at a total estimated construction cost of 873 million Relating to the foregoing there was 1 construction differential subsidy contract executed with a subsidized operator for aid in the conversion of 1 Mariner cargo vessel to a passengercargo vessel at an estimated construction cost of 11885000 and approval was given to the applications of 5 other subsidized operators contracts to be exe cuted in fiscal year 1958 subject to the availability of appropriated funds for construction aid in building or converting 20 ships at an estimated collective cost of 169 million The Federal Maritime Board and the Maritime Administration in addition to administering the programs covered heretofore continued to devote undiminished efforts to other programs and activities in cluding those involving the operation of ships under charter and general agency agreements maintenance of the national defense re serve fleets and the conduct of regulatory matters

Aid to Shipping Construction differential subsidy During the fiscal year the Federal Maritime Board with the concur rence of the Comptroller General and the Attorney General effected a settlement with the American Export Lines Inc in the matter of the Comptroller Generals exceptions to the construction subsidy al

P lowances granted that company in connection with the construction of the SS Independence and SS Constitution and the reconditioning of the four combination ships usually referred to as the FOUR ACES This settlement provided for payment by the operator to the United States of the sum of 279150128 in settlement of the claim of the United States in connection with the construction subsidy on the FOUR ACES and a full release of claims of the United States regarding the construction subsidy allowance granted in connection with building of the SSs Lidependenoe and Constitution The Federal Maritime Board during the fiscal year executed a con struction differential subsidy contract with the American Banner Lines Inc covering the conversion of one Mariner cargo vessel to a combination passengercargo vessel at a basic domestic contract price of 11885000 for operation in the New York and RollandBelgium service The Federal Maritime Board took action on the following and it was anticipated that formal construction differential subsidy contracts would be executed during the fiscal year 1958 a approved an appli cation of American President Lines Ltd for construction differential subsidy to aid in the construction and reconditioning of four Mariner class vessels at an estimated construction cost of 2200000 per ship to be used in the companys RoundtheWorld andor transpacific services b agreed to pay construction subsidy to Lykes Bros Steam ship Co Inc to aid in building 5 cargo vessels at an estimated domes tic construction cost of 9 million per ship to be operated in the Medi terranean service c approved the application of MooreMcCormack Lines Inc for construction aid in building 5 or 7 cargo ships at an estimated domestic cost of 10500000 per ship to be operated in the American Republics and American Scantic services and d agreed to pay construction differential subsidy to the Pacific Far East Line Inc for reconstruction and reconditioning of the SS Golden Mariner at an estimated total domestic cost of 2250000 to be operated in the West CoastFar East service The Board rescinded its action taken in fiscal year 1956 authorizing payment of construction differential subsidy on the cost of recon structing and reconditioning eight Mariners purchased by United States Lines Co Related to the foregoing there were approved by the Federal Mari time Board and accepted by the respective operators the following construction differential subsidy determinations The Pacific Far East Line Inc was authorized a construction differential allowance of 456 percent of the domestic cost of the conversion of three Mariner type vessels covered in their construction differential contract executed in fiscal year 1953 The estimated foreign cost per vessel amounted to 882000 as compared to the established domestic west coast cost of 1621000 The American Barrier Lines Inc was authorized a con struction differential allowance of 406 percent of the domestic cost

Cost figures quoted in this section of the report are exclusive of national defense allowances if any

5 of the conversion of a Marinertype vessel to a passengercargo ship covered in their construction differential subsidy contract executed in fiscal year 1957 The estimated foreign cost for the vessel amounted to 7050000 as compared to the lowest responsible domestic bid of 11866000 subsequently adjusted to 11885000 The American President Lines Ltd was authorized construction differential subsidy allowance of 396 percent of the domestic cost of reconditioning the passenger ships the President Cleveland and the President Wilson covered in their construction differential subsidy contract executed in fiscal year 1956 The estimated foreign cost per vessel amounted to 285000 as compared with the lowest responsible domestic bid of 466500 The following applications for construction differential subsidy were pending as of June 30 1957 a American Bulk Carriers Inc for construction of 4 combination bulk ore and petroleum carriers b American Export Lines Inc for construction of 4 cargo vessels for operation on Line F c American Mail Line Ltd for construc tion of 4 cargo vessels d American President Lines Ltd for con struction of a transpacific liner e H B Cantor New York N Y for construction of 2 large passenger vessels to be operated in the transatlantic service f Central Gulf Steamship Corp for construc tion of 1 bulk drycargo vessel of Maritime design g Clover Car riers Corp for construction of 1 bulk cargo vessel of Maritime design h Edison Steamship Corp for construction of a bulls drycargo vessel of Maritime design i Grainfleet Inc for construction of 1 combination oil and bulk drycargo carrier j Ocean Transporta tion Co for construction of a bulk drycargo vessel of Maritime de sign k Ore Transport Inc for construction of 1 combination tankerore carrier 1 Penn Shipping Co for construction of 1 bulk drycargo vessel of Maritime design and m TMT Trailer Ferry Inc for conversion of SS TMT Florida Queen to a rollonrolloff trailer ship

Federal ship mortgage and loan insurance The Maritime Administration during the course of the year executed contracts authorizing insurance of construction and mortgage loans made by banks and other lending agencies involving the companies listed and in the approximate amounts as follows a American Banner Lines Inc a reconstruction loan of 5 million and mortgage loan of 5500000 for the reconstruction of a Marinertype vessel b College Point Dry Dock Supply Co Inc a mortgage loan of 106500 c Eagle Carriers Inc a construction loan of 6363750 and mortgage loan of 7875000 for the construction of a tanker d Terminal Transport Corp a construction loan of 6363750 and a mortgage loan of 7875000 for the construction of a tanker e Mat son Navigation Co a mortgage loan of 13 million for reconstruction of the SS Matsoniai f Textron Inc a mortgage loan of 2 for the reconstruction of the SS Leilani exSS LaGuardia g

6 Ocean Transportation Co a construction loan of 7410000 and a mortgage loan of 10500000 for the construction of a tanker h Sea Transport Corp construction and mortgage loans of 8425000 and 10500000 respectively on the construction of each of two tank ers i Coastwise Line a mortgage loan of 780000 for the recon struction of the SS Coast Progress exNevadan and j Red Hills Corp a construction loan of 3187500 and a mortgage loan of 3850 000 for the construction of a tanker Of the title XI applications pending at the close of the last fiscal year the following applications have either been withdrawn or placed in an inactive status Alaska Steamship Co James M Jackson Pan Atlantic Steamship Corp Puerto Rico Railroad Transport Co and Trainships Inc The following title XI applications were pending as of June 30 1957 a American Eagle Tanker Corp for 1 tanker b American Hawaiian Steamship Co for 8 roll onrolloff special purpose ves sels c AmericanLiberty Steamship Corp for 9 rollonrolloff vessels d American Trading Production Corp for 2 tankers re construction e Black Ball Transport Inc for 1 combination pas senger and auto ferry and rollonrolloff trailer ship f The Bridge port Port Jefferson Steamboat Co for 1 rollonrolloff trailer ship g H B Cantor for 2 superliners h Central Gulf Steamship Corp for 1 bulls dry cargo i Clover Carriers Corp for 1 bulk dry cargo j Galapagos Inc for 1 tuna clipper k Nautilus Petro leum Carriers Corp for 1 tanker 1 New York Tankers Co Inc for 1 tanker m New London Freight Lines Inc for 2 rollonroll off ferries n Ocean Transportation Co Inc for 1 bulk dry cargo o Petrol Transportation Corp for 1 tanker p The Skouras Lines Inc for 1 tanker q Transeastern Shipping Corp for 1 tanker r Transportation Utilities Inc for 2 trailer ships s TMT Trailer Ferry Inc for reconstruction of the SS TilfT Florida Queen t United Vintners Lines for 1 special products tanker u World Wide Tankers for 1 tanker and v TMT Trailer Ferry Inc for additional coverage on the SS THT Carib Queen

Other forms of construction aid As of June 30 1957 the following applications were on hand for tradein allowances on old vessels to be applied against the construc tion cost of new vessels American Export Lines Inc for 4 old vessels against 4 new vessels American Mail Line Ltd for 3 old vessels against 4 new vessels MooreDlcCormack Lines Inc for 7 old vessels against 7 new vessels Ore Transport Inc for 1 old vessel against 1 new vessel In view of the fact that the Pan Atlantic Steamship Corp had not contracted for the building of seven new rollonrolloff vessels in accordance with the terms of its tradein and build contract wMeh provided for tradein allowance of 950000 on each vessel the trade in and build contract was deemed to be canceled

7 As of June 30 1957 balances in 13 construction reserve funds of nonsubsidized operators totaled 18801089 compared with 9692 483 as of June 30 1956 in 9 construction reserve funds Five new funds were established during the fiscal year 1957 and deposits were made to such funds However the total deposits in one of the new funds were withdrawn prior to the close of the fiscal year Deposits in the funds during the fiscal year amounted to 12935770 and with drawals totaled 3827165 The latter amount included 2235684 for purchase of vessels 250281 withdrawn by three separate deposi tors for application to mortgage indebtedness of which 43612 repre sented a reduction in the amount available under an irrevocable letter of credit and 1341200 withdrawn by four separate depositors for application to construction costs of new vessels In addition to mandatory deposits required by statute during fiscal year 1957 voluntary deposits of free earnings of subsidized operators were authorized in the total amount of approximately 8882550 for six operators As at the end of the fiscal year there were pending applications from five subsidized operators for authority to make voluntary deposits totaling 18950450

Operatingdijerential subsidy Operatingdifferential subsidy agreements with Pacific Argentine Brazil Line Inc and Seas Shipping Co Inc covering operations on trade routes Nos 24 and 15A respectively were terminated by mutual consent and the operating differential subsidy agreement with Moore McCormack Lines Inc was amended to include these subsi dized services Operation of these services by MooreMcCormack Lines Inc is being performed with vessels purchased from these two operators An operatingdifferential subsidy contract was awarded to Ameri can Banner Lines Inc to cover operation of a combination passenger cargo vessel after completion of its conversion on trade route No 8 between New York and ports in Belgium and the Netherlands At the close of fiscal year 1957 applications for new operatingdif ferential subsidy agreements were on file from the following compa nies T J McCarthy Steamship Co Isbrandtsen Co Inc United States Lines Co amendment of existing contract and Corydon Ohlrich Steamship Co for operation on trade route No 32 Great Lakes to Europe Isbrandtsen Co Inc for operation on Roundthe World service eastbound States Marine Corp for operation on trade routes Nos 13 29 30 and TriContinent services Isthmian Lines Inc for operation on RoundtheWorld westbound service and trade route No 18 Matson Orient Line Inc for operation on trade route No 12 and Waterman Steamship Corp for operation on four services As of the close of this fiscal year continued progress had been made in negotiations with Lykes Bros Steamship Co Inc and Mississippi Shipping Co Inc for execution of new operatingdifferential sub sidy agreements to become effective January 1 1958 following the termination of their current subsidy agreements as of December 31 1957 These contracts when executed will provide among other things for the replacement of each operators current fleet of vessels 53 and 14 ships respectively Progress had also been made with American Dlail Line Ltd as to the termination by mutual consent of the companys current subsidy agreement expiring December 31 1960 and the execution of a new longrange subsidy agreement which among other things would provide for the replacement of six vessels over their existing replacement requirements Negotiations were also in progress in the extension of Pacific Far Fast Lines contract pro viding for the replacement of seven ships over their existing contract requirements In addition consideration was being given to the ap plication of a States Steamship Co providing for the taking over of the subsidized service of its subsidiary the Pacific Transport Lines acquiring additional subsidized services cancellation of Pacific Trans port Lines old contract and the obtaining of a new contract effective January 1 1958 which would provide for the replacement of 9 ships over PTLs contract requirement and b Farrell Lines Inc for termination of their old contract and the execution of a new operating differential contract providing for the replacement of 14 ships Progress continued to be made in clearing up the backlog of operat ing differential subsidy rates applicable to the postwar period Of the 520 rates applicable to the calendar years 195556 238 were incom plete as of June 301957 all rates required for the calendar years 1947 through 1954 have been completel As of June 301957568143195 net advance subsidy payments subsidy less recapture had been made This amount represents payment on account from the date of postwar resumption of subsidized operations January 1 1947 through the calendar year 1956 and the first half of calendar year 1957 A sum mary of operating subsidy contracts is given in appendix C Aid to vessels over 20 years of age The Federal Maritime Board having found it to be in the public interest tinder section 605 b of the Merchant Marine Act 1936 as amended had authorized formerly and in the current fiscal year through issuance of formal order the continued payment of operating subsidy on ships now over 20 years old or which will become over age prior to the delivery of their scheduled replacements The action of the Federal Maritime Board in this matter was predicated upon the ship replacement provisions of the new operating subsidy contracts entered into by these companies Cumulative authorizations by the Boarcl in this connection are tabulated on the following page

0 Name of operator Vessel 29ofyearsage Scheduledreplacement

Grace Line Inc Santa Ana 1960 1963 Santa Tewsa 19W 1963 Santa Juana 1562 1968 Santa Adela 1962 1968 Santa Ord 1962 1969 Santa Flavin 1963 1968 Santa Eliana low 1966 Santa Leonor 1961 1966 Santa Mercedes 1964 1968 Santa Fe 1964 1969 Santa Anna low 1969 Santa Paula 1952 1958 Santa Rosa 1952 1959 Moore McCormack Lines Inc Argentina 1949 1958 ISnZd 1948 1958 American President Lines Ltd President lIarrison 1963 1966 President Johnson 1963 1966 President Van Buren 1963 1966 President McKinley 1966 1966 President Monroe 1960 1963 President Polk 1961 1963 President Hoover 1959 1961

Trade routes Continued progress was made during the year in reviewing the es sentiality and United Statesflag requirements of United States for eign trade routes as provided for in sections 211 a and b Mer chant Marine Act 1936 Reviews of five trade routes Nos 5 7 8 9passenger services and No 20passengerfreight service which were first declared to be essential in 1946 were completed In addi tion trade route 33United States Great LakesCaribbean was re viewed and declared to be essential to the foreign commerce of the United States Limited review was also made on three other routes Nos 17 24 and 29 resulting in minor modifications of liner service requirements

Ship Operations Demand for ocean shipping The fiscal year embraced a period of exceptionally heavy traffic activity with an increased demand for both United Statesflag and foreign flag vessels Notable features were the accelerated movement of coal for commercial account and the large export of grain prin cipally under the foreignaid programs of the Department of Agri culture and the International Cooperation Administration The in creased tonnage requirements reached an acute stage in the fall of 1956 resulting in the development of shortages in United Statesflag vessels This was aggravated by the blockade and subsequent closing of the Suez Canal in the fall of 1956 The Federal Maritime BoardMaritime Administration maintained constant surveillance over the situation and took appropriate action necessary to alleviate the shortage of shipping and the stabilization of

10 charter rates as indicated under the section of this report titled Charters Toward the end of the fiscal year there was a steadily decreasing volume of shipments and increasing availability of dry cargo tonnage materialized resulting from expansion of ship capacities by the re opening of the Suez Canal introduction of fast new foreignflag ves sels and the seasonal slump in demand for cargo space In compliance with the provisions of Public Resolution No 17 73d Congress the Maritime Administration continued to advise the Ex portImport Bank on shipping arrangements of exports financed un der the banks loan credits In this connection a number of waivers were authorized to the exclusive requirements as to the use of United Statesflag vessels as provided by the law so as to permit foreignflag participation in the cargo movements The countries involved in cluded Japan France Germany Italy Chile and Brazil Similar assistance was furnished other Government agencies and liaison was maintained with the shipping industry to assure the 50percent par ticipation of United States privately owned commercial vessels in movements of cargo financed by the Government as provided in Public Law 664 83d Congress

Charters The Federal Maritime Board during the period July 1956 through January 1957 held public hearings 13 in number with respect to applications from Americanflag operators for the bareboat charter of Governmentowned dry cargo ships in the reserve fleets The ships were to be utilized in the movement of Government sponsored bulk cargoes and other approved bulk cargoes As a result of these hear ings the Board authorized the charter of up to 223 ships based upon its findings that a the services under consideration were required in the public interest b such services were not being adequately served and c privately owned Americanflag vessels were not avail able for charter by private operators on reasonable conditions and at reasonable rates for use in such services The Maritime Adminis trator subsequent to Board action allocated 138 Liberty and Victory type ships and entered into bareboat charter agreements for such ships with 27 Americanflag operators The operation of Governmentowned ships under bareboat charter those covered in the preceding paragraph and those previously char tered increased from 22 to 151 in the fiscal year 1957 One hundred and forty of these ships including 2 modernized Libertytype ships were in the offshore trade 4 in the Alaska trade 4 in the west coast east coast intercoastal trade and 1 in the transportation and storage of cable used in laying a submarine telephone system between the Pacific coast and Alaska and Hawaii and 2 seagoing tugs were en gaged in hauls between South Atlantic United States ports to Puerto Rico In accordance with Public Law 591 81st Congress an annual review was made of all bareboat charters in effect as of June 30 1956

11 440405 585 under authority of the Merchant Ship Sales Act of 1946 as amended and it was found that the continuance of such charters was justified The increased traffic activities mentioned occasioned higher charter market rates during the year than had applied for several previous years The upward tendency was arrested to a considerable extent by the allocation of additional Governmentowned ships to bareboat charter operation and by the issuance of fair and reasonable rate ad vices to other Government agencies to guide them as to rates which might justifiably be paid for the shipment of Government financed cargoes In the latter area there were issued fair and reasonable time charter rates for the several standard types of ships in the cargo fleet and fair and reasonable voyage charter rates on grain coal and other bulk cargoes to the principal ports of 28 countries At the close of the fiscal year there was a considerable drop in the charter market rates due to the increasing availability of tonnage

General agency activities Thirtythree general agency ships were in operation at the com mencement of fiscal year 1957 These ships were assigned to 23 reg ularly approved general agents and represented the peak in general agency operated ships in the fiscal year 1957 All general agency op erations during the fiscal year 1957 were to meet requirements of the Military Sea Transportation Service including their Dewline op eration except for one inbound sugar cargo from Puerto Rico requested by the Department of the Interior

Grain storage On June 30 1956 there were at the various reserve fleets 330 idle Libertys loaded with grain for the account of the Commodity Credit Corporation Department of Agriculture During the fiscal year end ing June 30 1957 28 light Libertys were withdrawn and loaded with storage wheat additionally 162 laden ships were discharged and 34 of these were reloaded with new grain thus leaving a balance of 230 grainladen ships at the various reserve fleet sites with approximately 53 million bushels of grain in storage Since the inception of this program in 1953 the reserve fleet has been utilized for the storage of approximately 115 million bushels of grain

Port development As an aid to industry in its development of rollonrolloff and other special purpose shipping the Maritime Administration com pleted by contract a study entitled Shoreside Facilities for Trailer ship Trainship and Containership Services This study which in cludes engineering and design criteria suggested layouts photographs etc was made available to the public by sale and met with widespread and favorable response The ports of Ashland and Superior Wis and Duluth Minn were

12 inspected at the request of local port authorities and consultations were held with them with respect to future development plans of those ports Additionally conferences were held with other Great Lakes port authorities and plans for port development were reviewed and commented upon in the light of future opening of the St Lawrence Seaway In cooperation with the Department of the Army Board of Engi neers for Rivers and Harbors studies were completed on Port Series No 7 The Port of Philadelphia Pa and Camden and Gloucester City N J and Port Series No 8 The Port of Wilmington Del and Ports on Delaware River Below and Above Philadelphia Pa Studies on the ports of Boston San Diego Los Angeles Jacksonville and Tampa were in process at the end of the fiscal year

Ship custody At the close of the 1957 fiscal year there were 1889 ships in the reserve fleet During the year 238 ships were taken into the fleet and 410 were withdrawn for a net decrease of 172 ships The following table gives a breakdown of the ships at the various fleet sites Hudson River 147 Beaumont 181 James River 339 Suisun Bay 311 Wilmington 296 Astoria 200 Mobile 287 Olympia 128 The ship preservation program progressed to the extent possible within the limitations of appropriated funds with approximately 100 percent of the basic layup and preservation of ships completed and 68 percent of the years scheduled workload of recurring preserva tion finished by the end of the fiscal year By June 30 1957 the pro gram for the cathodic protection of the underwater surfaces of ships hulls was in operation at all reserve fleets

Other activities The acute tanker shortage caused by the closing of the Suez Canal resulted in the withdrawal of 29 tankers from the reserve fleet for as signment to the Navy Department 17 of which were permanently transferred and 12 transferred on a custody arrangement Forty eight Maritime Administration owned ships were under custody of other Government agencies at the end of the year These consisted of 23 dry cargo 15 tankers and 10 transports Through the cooperation of the Department of the Navy training programs were established to indoctrinate merchant marine shoreside and seagoing personnel in defense against radiological hazards and in damage control and firefighting In addition considerable progress was made on studies relative to the several recommendations of the Safety of Life at Sea study H R 2969 January 3 1957 including those toward the establishment of training for merchant marine of ficers in radar observation

13 Ship Construction and Repair Nuclear merchant ship program Steady progress was made by the Maritime Administration and the Atomic Energy Commission with respect to the design and construc tion of a nuclearpowered merchant ship as provided by Public Law 848 84th Congress The Congress appropriated 21 million to the Atomic Energy Commission for the reactor and the propulsion and pressure components and 18 million to the Maritime Administration for ship construction shore facilities and basic crew training Pursuant to this legislation and subsequent directive of the Presi dent the Maritime Administration and the Atomic Energy Commis sion entered into agreement as to each agencys sphere of responsibility and the integration of each in the construction of the total ship The following reflects the progress that was made during the fiscal year 1 The basic characteristics of the ship were established which provide a length of 587 feet beam 78 feet draft 291 feet dis placement 21840 tons reactor 35 feet in diameter and 51 feet in height and passenger accommodations for 60 2 A contract was executed with Babcock Wilcox Co for the design and fabrication of a pressurized water reactor nuclear propulsion system This provided for a fixed price of 9872000 for the basic plant with cost of plant spares installation piping and wiring outside the containment vessel and certain of the propulsion plant components to be negotiated as work proceeds 3 A cost contract was entered into with George G Sharp for the preparation of naval architectural and marine engineering contract plans and specifications of the nuclear ship exclusive of the propulsion plant as covered in 2 above 4 Surveys were made of the availability and capabilities of shipyards to construct the first nuclear ship 5 Six outside design contracts were awarded for feasibility studies to determine economic and technical applicability of various reactor concepts to unclearpowered merchant ships These studies were substantially completed and covered the gas cooled organic cooled and moderated boiling water and super critical reactor systems At the close of the fiscal year plans were crystallized for the accomplishment of objectives in fiscal year 1958 Those to be achieved are the completion and approval of plans and specifications for the ship including its reactor propulsion plant components and their systems testing evaluating and selecting the most economical uranium fuel awarding the ship construction contract scheduling construction to assure completion of the ship in the winter of 195960 development of requirements for the review and approval of the ship by the American Bureau of Shipping Coast Guard and Public Health operational plans of the ship including its docking and load

14 ing and discharge of active fuel and spent fuel waste and safety of crew passengers and dockside personnel It is generally recognized that the first ship will not be economically competitive with conventionally powered vessels The ship utilizing a pressurized water reactor system however will pioneer develop ment of nuclear powered merchant ships and be an extremely useful laboratory in which to learn and train for later vessels through prac tical experience and provide the basis for competitive nuclear merchant ships to follow However work activities confirmed the assumption that competitive nuclear powered merchant ships are technically feasible and one of the more promising economic applica tions of atomic energy Consequently the Maritime Administration and the Atomic Energy Commission have undertaken study and de velopment of other reactor systems to achieve the objective of com petitive nuclear power for merchant ships Work will be undertaken in fiscal year 1958 to develop engineering data on the particular prob lems of using the boiling water the organic and advanced pressurized water systems in merchant ships with particular attention devoted to plant optimization pitchandroll considerations and system com ponent prototype development It is expected that such systems could be economically utilized now for supertankers on long runs or special purpose vessels such as whalers In addition to the above studies indicated that a high temperature gas cooled reactor with a closedcycle gas turbine offers great promise for eventual lowcost propulsive power from a compact plant of rela tively light weight To prove out the concept it will be necessary to undertake work to resolve the technical problems of both the large scale closedcycle gas turbine and the reactor system Accordingly the Maritime Administration and the Atomic Energy Commission jointly planned to solicit industrial firms to act as a single prime contractor for the program with a contractor being selected in the second quarter of fiscal year 1958

Construction At the beginning of the fiscal year 15 ships were being constructed under Jaritime Administration contracts Of these four tankers under construction for the Department of the Navy were completed and accepted by the Maritime Administration during the year One rollonrolloff cargo vessel originally scheduled for delivery in June 1957 one cargo ship dock two bulk petroleum carriers and three small cargo ships being constructed for the Department of the Navy were scheduled for delivery in fiscal year 1958 Two passengercargo ships for Moore McCormack Lines Inc and two passengercargo ships for Grace Line Inc being constructed under title V sections 501 and 504 of the Merchant Marine Act 1936 as amended are scheduled for delivery in fiscal vears 1958 and 1959 During fiscal year 1957 a contract was awarded for the construc tion of one oil tanker for Government account under title VII Mer chant Marine Act of 1936

15 The ships being constructed under Maritime Administration con tracts as of June 30 1957 are given below

Type Name Builder Keel laid Estimateddelivery 03ST14a USNS Comet Sun Shipbuilding Dry May 151956 Nov 291957 SST2 23a USNS Pt Barrow MDockCoaryland Shipbuilding Sept 18 1956 Feb 231956 Dry Dock Co TlMET29a USNS AIatna Bethlehem Steel Corp Mar 161956 Tuly 171957 TIMET24a Chattahooche e do May 11956 Oct 251957 CIMEZ13s USNS Eltanin Avondale Marine Ways Inc June 41956 Sept 201957 ClME213a USNS Mirak do July 51956 Oct 311957 ClME213a USNS Mizer do Jan 211957 Nov 301957 P2S29a Passenger cargo The Ingalls Shipbuilding July 61956 July 251958 Corp P2S29a do do Oct 181956 Nov 211958 P2S2lla do Newport News Shipbuilding Jan 151957 May 291956 Dry Dock Co P2 SZi1e do Apr 91957 July 1 1958 T5S BM2a Oil tanker Thed Ingalls Shipbuilding July 81957 June 201958 Corp

The Esso Shipping Co had 4 tankers under construction in which the Maritime Administration had an interest by virtue of contracts for a the payment of national defense allowances totaling 1540000 on 2 and b payment of national defense allowances of 2100000 on the other 2 and tradein allowance on 5 obsolete vessels in the total amount of 5458379 Two of these tankers were completed during the fiscal year At the beginning of the fiscal year a critical condition existed with regard to the availability of shipbuilding types and grades of steel and ship components to supply the proposed maritime shipbuilding programs Extensive conferences were held with the major suppliers of shipgrade steel which resulted in the development of plans to provide sufficient production capacity for all types of structural steel with the possible exception of wide plates not required for all ships to meet the expanded shipbuilding program However a critical situation continues to exist with regard to many ship components The delivery leadtime on main turbines and gear sets cited last year as being 14 to 16 months has increased to 20 to 22 months on non priority orders and 16 to 18 months on priority orders with little prospect of improvement in the immediate future Final preparatory work in the form of an operating policy pro cedure is in process for implementing Public Law 805 84th Congress This will embody the results of studies of mobilization requirements for ships shipyards and manpower and surveys of existing shipyards their facilities and shipyard employment Near the close of the fiscal year bidders were put on notice in invitations to bid on ship construc tion that the Federal Maritime Board reserves the right to award con tracts by allocation under the provisions of this act A summary of new construction is contained in appendix E Conversions The last of 4 Marinertype vessels under conversion by the Bethle hem Steel Co Baltimore Md for the American President Lines

M Round theWorld service and 2 Mariners converted from cargo to passengertype vessels for The Oceanic Steamship Co by Willamette Iron R Steel Co Portland Oreg were completed and delivered A contract for the conversion of one Mariner from a cargo to a passenger type vessel for American Banner Line Inc was awarded to Ingalls Shipbuilding Corp Pascagoula Miss calling for completion early in calendar year 1958 The Liberty ship conversion and engine improvement program for which funds were approved by the 83d Congress under Public Law 663 was nearing completion The conversions of the Liberty ships SS Benjamin Chew MS Thomas Nelson and GTV Jolm Sergeant were completed and the ships were delivered to the Maritime Admin istration in July August and September 1956 respectively and the GTV William Patterson fourth Liberty ship in the conversion pro gram was scheduled for completion and sea trials in September 1957 Although evaluation studies of these ships were to continue during their operation in regular North Atlantic service under commercial operators indications were that the objectives of the program were being achieved in terms of a increased speed in excess of 1512 knots compared with a former speed of 10 knots and b feasibility of the ready upgrading and utilization in the event of national emer gency of some 1500 Libertytype ships in the reserve fleets In addition the program provided a basis for the development and com parison of new types of propulsion machinery and improved cargo handling equipment The SS LaGuardia sold to the Ilawaiian Steamship Co subse quently acquired by Textron Inc and the SS Monterey sold to the Matson Navigation Co during fiscal year 1956 pursuant to acts of Congress were reconditioned and returned to their owners during fiscal year 1957 under the new names SS Leilani and SS Matsonia respectively

Technical developments Considerable efforts were devoted during the year to technical ma rine developments In the area of propulsion systems a study is being conducted to develop a new design for marine reduction gears which will reduce their overall size weight and cost and permit produc tion by an increased number of manufacturers With respect to re finements to existing designs a study was made to determine the feasibility of increasing the power output of the free piston gas tur bine propulsion plant presently installed in the converted Liberty Ship William Patterson with a relatively small increase in the size weight and cost of the present plant Studies were conducted to determine the desirability of specifying damage control equipment and vessel waslidown as a part of atomic biological and chemical warfare countermeasures Designs for these countermeasures were developed for Liberty ships The Maritime Administration financially supported as well as par ticipated in the technical activities of the Maritime Cargo Trans 17 portation Conference of the National Academy of Sciences in a sus merchanttained effortmarineto improve the cargo handling efficiency of the American With assistance from H C Downer and Associates Inc Cleveland Ohio the Maritime Administration was having prepared an engineer ing study of the effects of the opening of the St Lawrence Seaway on the shipping industry This study will develop valuable informa tion bearing on the design of vessels for operation in and out of the Great Lakes through the Seaway Contract plans and specifications were completed for 4 new Mari time Administration cargo ship designs which were in process at the end of fiscal year 1956 and have been the basis of designs by operators for which construction is proposed during fiscal year 1958 These include the cargo designs Freedom 8650 deadweight tons 16 knots Clipper 10870 deadweight tons 18 knots Seafarer 15240 dead weight tons 18 knots and Bulk Carrier 26186 deadweight tons 16 knots Three of these designs were handled by private naval architects under supervision of the Maritime Administration and one by the Maritime Administration Public Law 947 directed the Maritime Administration the Federal Communications Commission and the United States Coast Guard to investigate and report on the need for and feasibility of installing automatic radiotelegraph call selectors or other such devices on board cargo ships of the United States carrying less than two radio opera tors The Maritime Administration participated in the investigation and in the preparation of a joint report which was submitted to Con gress March 1 1957 Further in the area of navigation and com munication equipment there were purchased 2 radar sets from the Sperry Gyroscope Co for 26968 and 3 radar sets from Raytheon Manufacturing Co for 35961 for placement aboard ships engaged in the Navys Arctic operations In addition 51 portable lifeboat radio sets were purchased from Mackay Radio Telegraph Co at a cost of 55620 for placement aboard Governmentowned ships in accordance with revised Coast Guard regulations Building proposals In view of the largescale replacement of cargo ships by subsidized operators and in an effort to reduce the trend toward higher cost of ship construction plans were crystallized which provided that builders be required by contract provisions where possible to employ value engineers whose duties are to effect all economies possible in materials manufacture or substitutions of equipment etc Invitations to bid were issued but contracts were not awarded during the fiscal year on the following building proposals a construction by the United States Lines under its operating subsidy agreement of a replacement of the SS America nearing obsolescence b construction by the AmericanHawaiian Steamship Co of 8 twin screw 25knot ships or 10 single screw 18knot ships with Federal mortgage insurance aid and c construction by the Central Gulf Steamship Corp and 18 the Clover Carriers Corp of 1 to 3 bulk carriers with construction differential subsidy aid and Federal mortgage insurance aid In ad dition pursuant to a memorandum of agreement with the Coast and Geodetic Survey a ship was designed for that service to their basic conception Bids were received but the contract award was held in abeyance pending supplemental appropriations by the Congress

Ship repair The bareboat chartering program also provided for the reactiva tion and repair of vessels in the reserve fleet thereby improving their efficiency and making them more readily available for future emer gencies Under this program there were a surveys made of 138 ships to ascertain the condition of each vessel at time of delivery to the bareboat charterer b contracts awarded for the account of the Mari time Administration on 111 of the 138 ships at a cost aggregating approximately 24 million provisions were made in the charterers agreement for recovery of this amount and c contracts awarded for the account of the charterers on 27 slips with review by the Mari time Administration for propriety and cost of reactivation and repair work The emergency ship repair program authorized by Public Law 608 83d Congress was substantially completed during the fiscal year The program within the limitations of the 18 million appropriation of the Congress enabled 150 Navy auxiliaries to be placed in a state of greater readiness in the event of national emergency and provided work for ship repair yards particularly during fiscal years 1955 and 1956 During the fiscal year 1841 inspections were made to verify sub sidized repairs of the 301 slips operating under subsidy agreement 78 of which were given full condition surveys at time of changes in status Repair summaries submitted by 16 subsidized operators were reviewed for subsidy eligibility and over 4 million of a total of 215 million was determined to be ineligible Reports and classification documents on 575 ships on which the Maritime Administration holds mortgages were reviewed and where appropriate action was instituted to insure that the vessels were maintained in an adequate condition to protect the Governments interest Fiftynine specifications entailing a total cost of 1291000 for major repairs to vessels under general agency agreements were reviewed for propriety of work and reasonableness of cost Shipping Studies and Reports Special studies Continued efforts were directed toward the conduct of special studies and the preparation of numerous reports in connection with hearings before the Congress and the Federal Maritime Board In addition reports were also prepared for among others the Department of De 19 446403584 feuse Planning Board for Ocean Shipping NATO and the Na tional Petroleum Council Two of such reports were occasioned by the nationalization and closing of the Suez Canal and covered a tiontankerandavailabilityor on orderand requirements and b tankers under construc Ship cargo and labor data The processing of reports of ship operations in the foreign and domestic deepsea trades of the United States continued on an in creased scale The increased foreign trade is reflected in the fact that more than 51000 reports covering entrances and clearances of dry cargo ships and tankers were processed during the past year which was approximately 11000 more than the previous year Data on foreignflag competition encountered by United States steamship com panies operating on 44 subsidized liner services during 1956 were pre pared for use in calculating operating differential subsidy rates Sta tistical data were also developed for consideration of applications for theoperatingFederaldifferentialMaritime subsidyBoard agreements that were pending before There was continued through the year the preparation of a number of reports reflecting cargo tonnages moving in United States foreign and domestic trades foreign cargo tonnages moving in specific serv ices status and employment of the United Statesflag fleet inventory of the merchant fleets of the world by flag of registry ships on order and under construction by type of ship in shipyards throughout the world and deliveries of merchant tonnage by flag of registry and country in which built Among the reports which are of a contin uous nature are those shown in appendixes A B and F The trend of decreasing seafaring employment was reversed and the number of shipboard jobs on United States privately owned and operated ships over 1000 gross tons increased from 57200 on June 30 1956 to 60700 on June 30 1957 Employment in shipyards ca pable of constructing ships over 400 feet increased from 40900 to 53300 with the number of production workers employed on projects for private account ship construction conversion and repair con tinuing its upward trend for an increase of 462 percent Labor data tabulations were prepared and made available includ ing Seafaring Employment 192557 Longshore Hourly Wage Rates 194656 various ports Seafaring Overtime Penalty Time and Non watchstanders Pay 194656 Typical Manning Scales and Basic Wage Rates 1939 1945 and 1956 Wage Tabulations of Various Unions 17 tables Employer Contributions for Pension and Welfare Plans 195056 Supporting data and technical assistance are being fur andnishedlongshoreto the Bureauwage studiesof Labor Statistics which is initiating seafaring Labormanagement relations Comparatively harmonious labor management collective bargaining negotiations were conducted between ship operators and the several 20 seafaring unions resulting in general wage increases of 6 percent for merchant seaman However Atlantic and Gulf coast shipping was handicapped by union representation problems involving the AFL CIO International Brotherhood of Longshoremen and the independ ent International Longshoremens Association Subsequent demands of the ILA for industrywide bargaining culminated in a 9day strike in November 1956 effective in all major ports from Maine to Texas involving an estimated 58000 longshoremen and more than 300 ships The Government was forced to exercise the national emergency pro visions of the TaftHartley Labor Management Act During the SO day nostrike injunction period negotiations continued and em ployees and longshoremen in South Atlantic and Gulf ports signed collective bargaining agreements but upon the termination of the in junction longshoremen from Maine to Virginia again went on strike for 10 days during February 1957 Shipyard union agreements were renegotiated without developing serious disputes Maritime Training United States Merchant Marine Academy During the reporting period the united States Merchant Marine Academy completed its first full year of operation as a permanent institution ender the provisions of Public Law 415 81th Congress During this time efforts were directed toward the issuance of adminis trative regiilations and procedures incident to the operation of the Academy in accordance with the provisions of law and the practices of the other service academies of the united States During the fiscal year there wars an average of 887 cadets including 7 Latin Americans enrolled in training at the Academy Two hun dred thirtythree cadets successfully completed the 4year course of instruction 76 graduating in February 1957 and 157 scheduled to be graduated in August 1951 Future graduations will be on an annual rather than a semiannual basis All received United States merchant marine officer licenses issued by the United States Coast Guard as third mates or third assistant engineers of ocean ships They also received bachelor of science degrees and if qualified commissions as ensigns in the United States Naval Reserve The 13th Congressional Board of Visitors was designated and its annual inspection was tentatively scheduled for the fall of 1957 The following were designated as members Senators Warren G Magnu son 11ashington ex officio Frederick G Payne Maine Frank J Lausche Ohio and William A Purtell Connecticut Representatives Herbert C Bonner North Carolina ex officio Leonor K Sullivan Missouri T Ashton Thompson Louisiana John H Ray New York Lindley I3eckworth Texas and Edwin B Dooley New York Pursuant to Public Lac 691 84th Congress the first meeting of the Advisor Board to the United States Merchant Marine Academy was held in March 1957 The Board which met at the Academy wag composed of the following members Carl Bailey dean of instruction 21 Concordia College John E Burchard dean School of Humanities and Social Studies Massachusetts Institute of Technology Harvey H Davis provost State University of Iowa Martin A Mason dean School of Engineering George Washington University Henry D Mercer chairman of the board States Marine Corp Edward Reyn olds administrative vice president Harvard University The Board held discussions with the Maritime Administrator and the Superin tendent of the Academy held executive sessions conducted hearings and visits and otherwise made investigations upon which to base its reports The Board expressed satisfaction in connection with actions taken as a result of the Ninth Academic Advisory Board report made March 28 1956 that annual graduation exercises have superseded the un desirable semiannual ones considerable progress has been made in the matter of improving the conditions of faculty travel and study including leaves of absence for constructive purposes promotions in the faculty have been undertaken on the advice of a faculty com mittee arrangements have been made with the Navy conducive to maintaining the Naval Reserve status of graduates of the Academy in very large measure although a more formal arrangement should be incorporated in legislation the Academy will undertake its own self evaluation at least a year in advance of the scheduled reexamina tion by the Middle States Association of Colleges and Secondary Schools in the spring of 1960 effective exchange visits with other academies are being carried on though this Board feels that a formal arrangement such as exists with the United States Military Academy should also be effected as soon as possible and even more appropriately with the United States Naval Academy and perhaps with the United States Coast Guard Academy as well and the new budget if ap proved will provide a more appropriate uniform and textbook al lowance to the cadets In addition the Board recommended that a consideration be given to increasing enrollment to the point that there be an annual graduation of 240 cadets and b opportunity be given to cadets to assume the responsibilities of licensed ships officers dur ing their 1yearatsea training through the use of a small freighter type ship and under the supervision of licensed personnel on the Academys staff

State maritime academies The State Maritime Academies at Vallejo Calif Castine Maine and Hyannis Mass and the New York State Maritime College at Fort Schuyler N Y had an average of 710 cadets in Federal pay status during the fiscal year and 167 others in State pay status There were 220 graduates who received their United States merchant marine officer licenses as third mates or third assistant engineers from the United States Coast Guard and those who qualified received com missions as ensigns in the United States Naval Reserve

PA Ships Sales and Transfers Ship sales A total of nine ships of the Mariner type were sold for an aggre gate sum of 49189719 to United States citizens for operation in the foreign commerce of the United States pursuant to the authority of the Merchant Marine Act of 1936 as amended Three of the ships were sold to Pacific Far East Line Inc 2 to American President Lines Ltd 2 to Pacific Transport Lines Inc 1 to United States Lines Co and 1 to American Banner Lines Inc These ships plus 20 of the type previously sold 7 in fiscal year 1955 13 in fiscal year 1956 provided the Americanflag fleet with an addition of modern ships of a speed essential to meet foreign competition This com pletes the disposition of the 35 Mariner ships constructed when au thorized by the Congress to meet the shipping demands occasioned by the Korean emergency as follows 1 lost 5 committed to the De partment of the Navy and 29 sold for a return in excess of 146 mil lion to the United States Treasury Title to six T2 tankers previously sold to Niarchosaffiliated cor porations under the Merchant Ship Sales Act of 1946 as amended was revested in the United States by court decrees of forfeiture with direction for delivery and custody of the tankers to the Maritime Ad ministration In late 1956 the Maritime Administration sold these tankers after competitive bidding pursuant to the provisions of the Merchant Marine Act 1936 for the aggregate sum of 13458426 The SS Panama a passenger ship declared surplus by its owner The Panama Canal Company a Governmentowned corporation was sold by the Maritime Administration pursuant to authority of the Merchant Marine Act of 1920 as amended for the sum of 5704000 to American President Lines Ltd As a result of the continuous survey of the ships in the reserve fleet 17 overage former Army andor Navy auxiliaries and 1 badly dam aged Liberty ship determined to lack sufficient value for commercial or national defense purposes to warrant retention were sold for scrap under the Merchant Marine Act 1936 resulting in a return of 5227 697 to the Government Under the provisions of Public Law 114 84th Congress approved June 30 1955 5 small coastal cargo ships of the ClMAVltype were sold for limited operation to Philippine companies3 ships to Com pania Maritima and 2 ships to Philippine Steam Navigation Com panyfor a total return of 3042920 to the Government Twelve additional ClMAVltype cargo ships were sold for a total sales price of 8326344 to the Government of Brazil for operation in its coastwise trade under authority of Public Law 496 83d Congress approved July 15 1954 Transfers to foreign ownership andlor registry During the fiscal year the policy with respect to approval of trans fers of United States privately owned ships to foreign ownership 23 andor registry was revised The revised policy will a be some what more restrictive on numbers of vessels traded out against com Mitment for new construction b provide for continuation of transfer conditions as to use and subsequent transfer for the economic life of the ship 20 years c continue the general terms and condi tions as to subsequent sale or transfer but application of such condi tions pertains to vessels of 3000 gross tons and over instead of vessels of 1000 gross tons and d clarify other aspects of the transfer policy Appendix D summarizes applications approved pursuant to sections 9 andor 37 of the Shipping Act 1916 as amended for transfer to for eign ownership andor registry of ships owned by United States citi zens Of the total 1022 approved were ships of less than 1000 gross tons such as tugs barges fishing craft and pleasure craft The re maining 148 ships were of 1000 gross tons and over In connection with this latter group and pursuant to a condition of transfer the Maritime Administration has approved the resale of 43 foreignflag ships to other foreign nationals subject to the same terms and condi tions as those which governed the original transactions Further of the total United Statesflag vessels of 1000 gross tons and over approved for transfer to foreign ownership and registry 72 were approved for transfer in consideration for the construction of new tonnage or rebuilding of existing tonnage in the United States During the year two applications for approval to transfer United States privately owned ships of 1000 gross tons and over were denied Fortysix charters of United States privately owned ships to aliens were approved by the Maritime Administration inclndin contracts of afFreightment and voyage and time charters for periods ranging from 1 to 20 years Property and Supply At the close of the fiscal year plans were formulated for the condnet during fiscal year 1958 of a comprehensive survey of all real and personal property holdings of the Maritime Administration This survey will be conducted of reserve shipyards warehouses terminals reserve training stations and the materials equipment and stock con tained therein for the purpose of determining a real and personal property requiring retention to meet normal and emergency condi tions b property susceptible to disposition by sale transfer to other Government agencies or disposal by other means c necessary re pairs or replacements to real property and measures to be applied in the preservation and custody of personal property Shipyards The maintenance and security program was continued at the four Governmentowned reserve shipyards at Wilmington N C Richmond and Alameda Calif and Vancouver Wash At the North Carolina shipyard the lease of approximately 50 acres of open land to the North 24 Carolina State Ports Authority has continued The State has con structed thereon a 3berth marginal wharf 2 large transit sheds a large warehouse and a 200000gallon elevated water tank Certain portions of this shipyard continue to be used under permit by the Departments of the Army and Navy for reserve training and by the Corps of Engineers for the purpose of overhauling its dredging equip ment A contract was awarded for the demolition of deteriorated piersAt andthe Richmondshipways shipyard licenses and permits were continued for the housing of the Contra Costa Junior College pending construction of its permanent campus for the berthing of MSTS vessels for the Travis Air Force Base for installation of a radio transmitter by the American Red Cross and Public Housing Administration for storage of administrative equipment the Administration being reimbursed for utilities furnished and Contra Costa Junior College maintaining the buildings used by it The lease of the machine shop in this yard to the Kaiser Aircraft S Electronics Corp formerly the Chase Air craft Co Inc was continued During the fiscal year a permit was granted to the Department of the Navy for the use and occupancy of a building for electronics training and storage purposes the Admin istration being reimbursed for utilities supplied or services rendered At Alameda Reserve Shipyard the Coast and Geodetic Survey un der permit berths its ships Pioneer and Bowie without cost except re imbursement to Maritime Administration for utilities used During the fiscal year a portion of a building was leased to the Bethlehem Pacific Coast Steel Corp for office purposes and warehouse space to Encinal Terminals for the storage of sacked rice At the Vancouver shipyard the permits to the Bonneville Power Administration and the Department of the Air Force were continued the Air Force permit covering a major portion of the shipyard land and some 35 buildings for the storage of Air Force vehicles and other material The Administration was reimbursed for utilities used and the permittees have assumed maintenance and security of property within their control A contract was awarded for the demolition of deteriorated timber shipways and eraneways which work has been largely completed Terminals and reserve training stations The major portion of the Norfolk Va terminal is occupied by the Departments of the Army and the Navy under permits from the Ad ministration These agencies cooperate in maintaining some move ment of commercial ocean cargoes which are handled under a terminal operating contract supervised by the Maritime Administration The Hoboken N J terminal is under longterm lease to the Port of New York Authority During the year the port authority completed pier A which replaces piers 1 and 2 and completed their rehabilitation and construction program at a costto them of 17683742 in the 4 years the lease has been in effect 25 The status of the reserve training stations follows Maintenance and security programs are still in effect at the Alameda Reserve Train ing Station and the Air Force and the city of St Petersburg con tinued the control occupancy use and maintenance of Sheepshead tivelyBay Training Station and St Petersburg Training Station respec

Warehouses The Administration continued the operation of the five Government owned warehouses at Kearny N J Baltimore Md Norfolk Va New Orleans La and Richmond Calif These warehouses provided facilities for the storage of vital marine equipment required in a na tional emergency for the reactivation of the vessels in the national defense reserve fleets and the construction repair and operation of vessels in such emergency At the end of the fiscal year the ware taledhouse37752898inventoriesaexclusivedecrease of 1939732administrative equipment stocks to Material control inventory and disposal There were 445 ship and related inventories accomplished and in ventory certificates for consumable stores were processed in the amount of 945016 as accounts receivable and 58682 as accounts payable Certificates of overages and shortages were processed in the amount of 74854 as accounts receivable and 78957 as accounts payable At the beginning of the year there was 178719 worth of material for determination as to disposition During the year 4194941 was reported from offsite locations and warehouses to be identified seg regated and processed for utilization retention or disposal Of this there remained 604243 at the close of the period Surplus and excess personal property other than sunken ships hav ing a reported acquisition value of 1926910 was disposed of by the Maritime Administration This amount includes transfers and sales in foreign countries of property valued at 17383 for which there were received foreign currencies equivalent to 1714 Property having an acquisition value of 1909527 was disposed of in the domestic market in the following manner with the acquisition value as indi cated sold 1518978 transferred to other Government agencies 214884 donated for health education and welfare purposes 172660 abandoned or destroyed 3004 The proceeds received from the above sales and transfers with exchange of funds amounted to 249950 Passenger ship equipment was sold to Hawaiian Steamship Co under authority of Private Law 361 84th Congress for a return of 43747 administrative and marine equipment was sold in accordance with the exchange sales provisions of the Federal Property and Ad ministrative Services Act of 1949 as amended with a return of ment18034 for application against the purchase of replacement equip

26 Sunken ships which had previously been written oil the books as constructive total losses ere sold for a return of 3720 A volume of 6458 cubic feet of records was disposed of and 4565 cubic feet of records were transferred to Federal records centers re leasing 1456 file cabinets and units having a value in excess of 51611 and releasing over 8500 square feet of space

Purchasing iZaterials supplies equipment and services required il the repair maintenance and operation of the reserve fleets reserve shipyards and training vessels and for the operation of administrative offices of the Administration purchased Iu coordination with Department of Defense activities Procure ment planning for ship construction and repair ship operations and shipyard mobilization cmnponelnts resulted in 6 production alloca tion agreemuents ascl renenals with manufacturing facilities for the fiscal year 195 There were 321 major types of equipment included ill these agreements During the year 199 plant surveys and f eld con ferences with industry officials were held to determine production capacity of industry and discuss manufacturing detail of component schedules Administrative Management Program and defense planning Planning was directed to meeting the demands placed upon the countrys merchant nnarine during the fiscal year and the anticipated requireeats of future years Of particular seguilicauce were a the continued efforts toward the chiecennent of a plamsed o gaange shipbuilding progrnu through the negotiation of new operatingdif ferential subsidy contracts providing for phased lougrange slap re placcnlentsdevelopment andprogramsb theto assureestablishmentthroughofparticipationan organizedofresearchthe Governand ent anda inehestre the development an adaptetiou of nev equip mnrnt sv tenus and technolo intprovenuents ill the coustruution anri cpel of nerchanT ships Mobilization planning projects that received alteration during the year were a development of operating instructions for utilization Of ship repair facilities during all cunergency under joint plans of the Department of Defense and the Department of Commerce b pro duction of two documents by the Joint faradNavy Planning Group uncles the cochairmansllip of the Deput fiat itiute kolininistrator

and the Deputy Conunander Military Sea Transportation Serviceemer covering ship requirements and availabilitiesof the mobilizationto meet shipbuilding gency conditions c re program based upon Joint Chiefs of Staff guidance d development of maritime mobilization manpower requirements e issuance in cooperation with the Department of the Navy of instructions and 27 446403 6SB procedures to be followed by masters of United States merchant ships to ensure It rapid and smooth transition in the event of war The Maritime Administration as the delegate agency recommended favorable action to the Office of Defense Mobilization on 31 applica tions for necessity certificates authorizing accelerated depreciation for bxs purposes as provided under section 124A of the Internal Revenue Code The applications covered the proposed construction of a total of i2 ships at aggregate estimated costs of 019179000 and included 38 tankers 14 rollonrolloff ships and 1 tank barge Personnel Ben IL Guill of Texas Vice Chairman of the Federal Maritime Board was reappointed by the President on June 13 1957 with the consent of the Senate as a member of the Federal Maritime Board for a term of 4 years expiring June 30 1901 The total number of personnel on the rolls of the Maritime Admin istration on June 30 1957 was 323 which is a decrease of 84 percent under that reported for June 30 1950 The major share of this

programreduction resulted from the completion of the emergency ship repair

Organization and nzetlaods In the interest of providing for more efficient administration of its rvorlc programs during tile fiscal year the Maritime Administration effected as were necessary reorganizations and realignments of func tions The principal organizational changes were a reorganiza tion of the Office of the General Counsel resulting in separlde organi zational entities for legal matters involving operatingtype contracts is distinguished from constructimrtype contracts and b estab lishment of a Nuclear Projects Office as a staff office responsible to the Maritime Administrator for aclivities relating to the application of nuclear propulsion to merchant ships During the East year there were conducted functional surveys of a number of our activities including 1 personnel accounting and purchasing methods and practices for the United States Merchant Marine Academy 2 policies applicable to administrative enrollees at the Academy 3 office services of the Washington office 4 overall Maritime Administration purchasing and procurement poli frocies andactivitiespracticesof theandagency5 combination of freight and passenger Security and investigation The security program with respect to the internal management of the Maritime Administration was continued in accordance with the provisions of Executive Orders 10450 and 10501 In addition staff advice was given on the security aspects involved in ile transfers Of ownership of vessels foreign and dolrestie which required ap 28 proval of the Maritime Administration and on the approvals of operators of mortgaged vessels Investigation continued through the year to determine whether certain purchasers of ships under the Merchant Ship Sales Act of 1946 as amended qualified as United States citizens As a result of these and prior investigations the Government realized 200000 in cash settlements and 147905 in waiver of claims against the Gov ernment In addition investigations which were conducted involving alleged charters of United Statesflag vessels to aliens without Mari time Administration approval resulted in cash settlements of 20000 through mitigation of forfeiture Thirtyfour regulatory investigations were conducted involving activities of freight forwarders false billings terminal operations alleged rebates on freight and other regulatory matters

Finance Financial relationships with contractors Activities in connection with the establishment of financial require ments and the obtaining of compliance therewith for companies having contracts with the Federal Maritime Board and the Maritime Administration reached the highest peals since 1950 when sales of vessels under the Merchant Ship Sales Act of 1946 were being accom plished Directly related financial activities included the examina tion and analysis of corporate and personal financial statements and the review and approval of financial plans particularly with regard to new ship construction outlined by contractors and proposed contractors These increased financial activities maintained on a current basis resulted largely from applications received for ship loan and mort gage insurance under the provisions of Title XI Merchant Marine Act 1936 as amended and included also tradeout and tradein and build transactions These activities were in addition to the analysis of financial statements submitted by applicants to 1 assume mort gages on warbuilt ships previously sold by the Government 2 charter ships 3 act as surety on bonds required by the Maritime Administration 4 serve as repair contractors and 5 serve as prime shipbuilding contractors

Accounting Accounting operations were maintained on a current basis and in accordance with principles and standards prescribed by the Comp troller General of the United States The accounts provide for full disclosure of financial results adequate financial reports for manage ment proposes effective accountability and internal audit reliable accounting results and necessary controls for current budgeting practices and suitable integration with the accounting of the Treas

29 ury Department A change in accounting policy was made during the year with respect to materials and supplies whereby a substantial portion of the inventories heretofore classified as current assets in preparation of financial statements are now classified as noncurrent assets Mobilization Inventories of Materials and Supplies These inventories represent materials and supplies held for ships in the National Defense Reserve Fleet or vessels that would be requisitioned by the Maritime Administration in time of emergency Financial statements of the Federal Maritime Board and Maritime Adminis tration including three revolving funds are contained in the exhibits and schedules following the text of this report On Jute 30 1957 there remained only 1 of the 206 War Shipping Administration agents with respect to which agreennent has not been reached as to settlement of their reported agency transactions Of the 51 agents under National Shipping Authority operations originat ing in 1951 37 were inactive as of Jime 30 1957 The accounts of 19 of the inactive agents have been closed and release agreements have been executed with 9 the accounts of the remaining 18 inactive agents are inn the process of being closed and few item will be outstanding for any length of time

Audits The principal audit activities resulted from operating differential subsidy agreements bareboat charter agreements and construction reconversion and repair contracts Audits of operating differential subsidy agreements include the review of annual accountings filed by subsidized operators and the audit of vessel operating expenses eligible for operating differential subsidy Except for protection and in demnity insurance expense audits of subsidizable expenses to permit payment up to 90 percent of accrued subsidy have been completed through the calendar year 1953 Daring the current fiscal year audits of annual subsidy accountings were completed including protection and indemnity expense if involved to permit the payment of the final 10 percent of accrued subsidy covering a period of 10 calendar years with respect to 4 subsidized operators Construction reconversion and repair contracts are being audited on a current basis Audits tinder bareboat charter agreements have been deferred because of pending litigation with most of the charterers To the audit workload of 404 existing on June 0 1956 additional audit requirements to taling 551 have been added and 588 were completed leaving a total workload of 367 audits on tune 30 1957 Additional recapture due the Government as a result of audits completed during the fiscal year amounted to 1406801 Appendix G attached sets forth by operators the balances in the statutory capital and special reserve funds on June 30 1957 aggre gating 123105829 and 97909311 respectively At the beginning of the fiscal year such balances aggregated 139356953 and 88 755501 respectively In addition to mandatory deposits on approval of the Maritime

M Administrator subsidized operators are permitted to make voluntary deposits into statutory reserve funds for new ship construction on a tagdeferred basis from profits otherwise available for dividends Dur ing the fiscal year 1957 applications for making voluntary deposits were approved for 6 operators in a total amount of 8882550 and applications of 5 operators totaling 18950450 were pending at the close of the fiscal year

Internal audits Internal audits of the financial aspects of the agencys program were conducted on a continuing basis as an essential part of the Maritime Administrations system of internal control During fiscal year 1957 in addition to the performance of test audits of the books of account special examinations were made of construction and operatingdiffer ential subsidy determinations and of records and control techniques relating to warehousing activities

Insurance A new contract to furnish insurance against protection and in demnity risks was awarded as a result of competitive bids to the Con tinental Insurance Co Marine Office of America agent of New York effective April 1 1957 covering ships operated by general agents of the National Shipping Authority in the Military Sea Trans portation Service program During fiscal year 1957 there was recovered from underwriters un der the recapture provisions of the wartime protection and indemnity insurance agreement a total of 275000 As of June 30 1957 the protection and indemnity underwriters are retaining as a reserve for the settlement of outstanding claims of record the sum of 2142819 representing the minimum estimated requirement plus a small con tingency The hull underwriters have concluded settlement of the last outstanding case and the account for recapture under the wartime hull insurance agreement was liquidated To date recoveries total 61294024 representing 47750000 from protection and indemnity and 13544024 from hull underwriters Under the Maritime Administration selfinsurance program hull marine and war risk insurance as well as second seamens insurance continued to be assumed on its Governmentowned vessels Second seamens insurance remained in effect on 73 Department of the Navy contract operated tankers On June 30 1957 after 42 months under this arrangement the net premium savings were estimated at 25000 after considering approximately 70000 set aside as a reserve for pending claims In accordance with authority contained in Title XII Merchant Marine Act of 1936 the Maritime Administration continued to under write excess legal liability insurance provided under a contract be tween the Department of the Army and a transportation contractor which coverage could not be obtained in the domestic market except at

31 generally prohibitive rates Under the terms of this agreement it is provided that the Department of the Army will reimburse the Mari time Administration for any losses incurred after 6 years of this ar rangement no claim has been filed Under the standby war risk insurance program as authorized under Title XII Merchant Marine Act 1936 as amended 932 new war risk insurance binders were issued On June 30 1957 binders reported outstanding were as follows 1045 war risk hull 973 war risk protec tion and indemnity and 892 war risk second seamen Since the in ception of the program net binder fees and binder extension fees of 304687 were received and a total of 109625 in expenses and fees was incurred of which 101805 was paid to the underwriting agent The Maritime Administration continued during the fiscal year with the collection of monthly premiums on war risk builders risk insurance underwritten as authorized under subpart E of General Order 75 Re vised published in the Federal Register on February 281957 From inception of the program to June 30 1957 22 war risk builders risk policies had been issued and premiums totaling 150873 received In accordance with its insurance compliance responsibilities the Maritime Administration approved original insurance or renewals thereof generally on an annual or quarterly basis obtained in com mercial markets by mortgagors charterers and subsidized operators in the following amounts

Kind of Insurance Totalamount I PercentageAmerican I Percentageforeign

1935899682 41 0 2 884 889 544 39 61 3 646 0 458 5 95 2 920 6 024 I 3 97

Notes and accounts receivable Of the balance of notes and accounts receivable on June m 1957 totaling approximately 15 million an amountapproximating 550000 represents items on which active collection efforts were required The remainder of the balance was made up of additional charter hire to be collected at the time of final accountings amounts referred to the Department of Justice notes accepted in liquidation of open accounts exclusive of mortgage loan notes accrued construction costs to be settled upon completion of ship construction matters pending in a claim or litigation status and accounts on the books of the National Shipping Authority general agents Of billings made during the fiscal year totaling approximately 138 million only 1026221 or slightly less than 1 percent was outstanding and due from miscellane ous debtors exclusive of other Government agencies at the end of the year

Claims On June 301957 there were on hand the following claims a 185 unlitigated claims having a value of 6332981 in favor of the Gov 32 ernment b 300 unlitigated claims having a value of 6069990 against the Government c 82 claims having a claimed value of 12558425 in favor of the Government with the Department of Justice for litigation and d 505 claims having a claimed value of 181105 293 against the Government with the Department of Justice for litiga tion The following reflects those settled under the Suits in Admiralty Act during fiscal year 1957 6 claims upon which 653237 was claimed were settled in favor of the Government for 296050 and 15 claims upon which 1093296 was claimed were settled against the Govern ment for 104259 Legal Activities In addition to the specific legal activities that follow advisory serv ices and opinions were furnished to the Federal Maritime Board the Maritime Administrator other Government agencies and to the vari ous operating and administrative offices of the agency in connection with the legal aspects or problems involved in all of its activities

Legislation Testimony statements or reports to congressional committees to the Secretary of Commerce or the Bureau of the Budget were prepared on maritime legislation enacted into law as follows Authority for the Defense Department to furnish terminal services to commercial steam ship companies Department of Commerce Appropriation Act for fiscal year ending June 80 1958 authority for the Department of the Navy to sell degaussing equipment to privately owned United Statesflag merchant ships extension of the War Risk Hazards Act of December 2 1942 for employees of the contractors of the United States and extension of war risk hazards compensation for employees of the United States Representatives of the Maritime Administration and the Federal Maritime Board testified at congressional hearings on the subjects of transfer of vessels foreign tradein on new construction sale foreign of reserve fleet vessels and on other maritime matters and bills Formal reports were prepared and submitted to the Congress or the Bureau of the Budget on 135 bills and proposals and program and informa tion files were maintained on 365 bills and proposals which were exam ined A number of special legislative studies opinions histories and analyses were prepared including those on the subject of tax defer ment for earnings of unsubsidized companies for new construction and investment of reserve funds of United States operators in common stocks under provisions of the Merchant Marine Act 1936

Contracts A voluminous number of contracts addenda bonds and other docu ments were executed including addenda to operatingdifferential sub sidy contracts These included 5 design and study contracts in 33 preparation for the construction of the first nuclearpowered merchant ship 14 contracts of ship construction loan or mortgage insurance and 9 commitments to insure mortgage loans in connection with the con version of the Carib Queen to a rollonrolloft type vessel 3 Mariners to passengercargo vessels and a C4type ship to a liquid cargo carrier construction of 6 tankers and a steel barge jumboizing a tanker re construction of the SS Leilani to a passenger vessel and the SS Matsonia to a passenger ship 1 new longrange operating differential subsidy agreement charter agreements covering the SS Old Colony Mariner SS SeliuyZer Otis Bland and 2 V4 oceangoing tugs purchase contracts bills of sale and mortgages covering the sale of 9 Mariners under the provisions of the 1936 act 17 ships for scrap or nonopera tional use under the 1936 act 5 ClMAVltype ships to Philippine companies under the provisions of Public Law 114 84th Congress 12 ClMAVl type ships to the Government of Brazil under Public Law 496 83d Congress and 6 tankers to Americanflag companies under the 1936 act construction differential subsidy contracts for the conversion of 1 Mariner to a passengercargo ship and the reconstruc tion of the SS President Wilson and SS President Cleveland Considerable additional efforts in the contracting field and the legal aspects related thereto were engaged in among which were a de velopment of proposed general provisions for constructiondifferen tial vessel construction and conversion contracts b development of revisions to the standard portions of operating differential subsidy agreements c revision of the definition of the term capital neces sarily employed in the business as it relates to operating subsidy contracts d preparation of a pro forma amendment to section 9 of ship sales adjustment contracts and e negotiations and con ferences relative to pending applications which are covered specifically under other sections of this report

Litigation A considerable amount of pending litigation was composed of claims against the Government under the Merchant Ship Sales Act of 1946 During the fiscal year 45 petitions were dismissed by the Court of Claims involving refunds of additional charter hire under postwar charters of warbuilt vessels As of the close of the fiscal year 2 cases brought in the Court of Claims were pending 24 cases were pending in the district courts of 7 States and 14 cases were on appeal to the Circuit Court of Appeals 2d Circuit from decisions favorable to the United States on the question of time bar with respect to litigation involving the validity of the Maritime Adminis trations computation of charter hire In view of the foregoing it is believed that while an estimated 40 million in claims was involved at the beginning of the fiscal year considerably less will be involved in the ultimate settlement of these cases if the court decisions of the past year are upheld in the pending litigation In this area the agency had an estimated 4 million receivable from unpaid additional charter hire

34 The Supreme Court of the United States held against the Govern ment in the case of United States v California Eastern Line Inc The Court held that the Iced Sea charters between owners and the British Ministry of War Transport were not renegotiable Accord ingly there are now being processed to the General Services Ad ministration statements of account as a basis for refunds of excessive profits for payment to claimants involving an alleged 134 million In addition to the foregoing there were at the end of the fiscal year the following categories of pending claims under the Merchant Ship Sales Act of 1946 in excess of lo million claimed by 35 pur chasers for alleged class deficiencies and failure to remove defense features claims covering 30 vessels totaling 12 million on the ground of the invalidity of this agencys settlements for prior sales 5 suits involving 10 ships in the amount of 12 million covering the issue of whether the Maritime Administration could exact cer tain payments or promises as conditions to granting the privilege of transferring vessels to foreign registry claims by 3 citizen purchasers totaling 637360 plus interest which challenged the right of the agency to charge the floor price for ships when it was higher than the unadjusted statutory sales prices 12 suits by citizen buyers amounting to 197843 which primarily cover refunds for desirable features payments 21 cases in this category were closed and some others are in process of settlement and 4 similar suits by aliens in this category Under the 1946 act this agency has 106 receivables against foreign buyers for desirable features totaling 620500 32 of which have been referred to the Department of Justice In the area of just compensation claims only 7 suits were pending with a judgment in this category being awarded by the District Court SDNY in an amount totaling 504477 as interest for approximately 12 years on claims of the American Hawaiian Steamship Co The number of cases involving overtimeonovertime and travel time claims of longshoremen arising out of War Shipping Admin istration operations was markedly reduced with proportionate decrease in the enormous potential liability which the Maritime Ad ministration as successor agency to the War Shipping Administra tion initially faced under operating contracts with stevedoring and shipping companies The following court decisions were rendered during the year having an effect upon claims litigation a the Eseo Nederland decision in the Court of Claims which held that desirable features charges could be added to the floor price under a contract of sale to a foreigner and that the Governments opinion as to what were desirable features was an expert one and presumptively right but reviewable by the courts for possible arbitrary action or action not based on substantial evidence b the decision in the case of Republic of China and the United States v Natioiaa7 Union Fire Insurance Company of Pitts burgh in which the United States District Court Md held that the libelants were entitled to recover from the respondent approxi mately 3 million for six vessels that were lost by the barratrous acts

35 of their crews but held for the insurance company with respect to the seventh vessel the Hai Hsuan which the Court found had been seized by the crew The policies covered loss caused by barratry but excluded loss caused by capture or seizure The subject vessels had been sold by the Maritime Commission in 1947 to the Republic of China which executed mortgages in favor of the United States Government The crews of the vessels defected to the Chinese Com munists in January 1950 ran up the Red flag on the ships and held them for the Communist Government They had previously disobeyed the shipownerssailing orders In United States v The Owners of the Hai Hsuan before the High Court of the Colony of Singapore assistance was rendered to the Department of Justice in the prosecution of the case In addition to the foregoing there was considerable litigation involving court review of the determinations and orders of the Federal Maritime Board in the regulatory and subsidy fields With respect to the regulatory field there were before the courts in addition to matters of litigation reflected in other sections of this report five proceedings in review of Board orders which concerned dual rates port equalization practices and other agreements between carriers In Pacific Far East Line Inc v United States the United States Court of Appeals for the District of Columbia upheld an order of the Federal Maritime Board involving port equalization practices and in AssociatedPunning v United States that court dismissed a petition to review a Board order approving an agreement under section 15 of the Shipping Act 1916 In Isbrandtsen v United States the same court reversed a Federal Maritime Board order approving a dual rate system on the ground that the system in the opinion of the court is illegal per se Subsequently the Supreme Court of the United States granted the Boards petition for a writ of certiorari and the case was pending review by the Supreme Court at the close of the fiscal year The same Court of Appeals held in abeyance the case of Ezra Taft Benson v United States which also involves the legality of the dual rate system pending the Supreme Courts decision in the Isbrandtsen case There was also pending at the close of the year the case of Angle Canadian Shipping Co Ltd v United States in which the United States Court of Appeals for the 9th circuit was petitioned to review a Board order limiting the scope of petitioners dual rate system In connection with the subsidy field there was pending in the United States District Court for the District of Columbia the case of Isbrandtsen v United States in which plaintiff seeks declaratory judgment and injunctive relief as to the payment of operating differential subsidy to American Export Lines Regulatory Activities During the fiscal year 1957 ship operating costs continued to rise due in a large measure to increased labor costs higher prices for fuel and port delays in some trades The result was another round of 36 ocean freight rate increases which might have been greater had not the carriers revenues been above normal due to the high volume of cargo available for shipment in the early part of the year At the end of the year cargo offerings in many of the foreign trades were falling off and indications were that the booming freight market was ended However the increases in operating costs have remained so that carriers in a number of trades will be faced with the difficult process of adjusting declining revenues to continued high operating costs Uuder such circumstances much may depend upon the soli darity which the steamship conferences are able to maintain to avert a general freight market collapse with resulting rate wars in various trades A strong conference system with publicized rates which are stable but reasonable is considered to be one of the essential factors to the maintenance of a strong foreign trade In recognition of this the Federal Maritime Board has continued to deal with the contract rate problem of steamship conferences in an effort to arrive at a permanent solution in the face of continued attacks before the courts and in this connection has petitioned the United States Supreme Court for review of the decision of the Court of Appeals of the District of Columbia holding that the dualrate system of the Japan Atlantic and Gulf Freight Conference is illegal per se under section 14 Third Shipping Act 1916 Further the Board has long felt that a wider distribution of ocean freight tariffs will facilitate the conduct of trade and with this in mind it has urged all steamship lines and conferences in the foreign trade to adopt systems whereby their freight tariffs will be made available for public distribution either free or upon payment of a reasonable subscription fee A number of conferences already maintain such distribution systems and the Board is hopeful that other conferences will take voluntary steps to achieve the desired result

Conferences and other agreements The Federal Maritime Board approved 115 new agreements 49 agreement modifications and 32 agreement cancellations Among the significant agreements approved were a 3 ratefixing or con ference agreements covering household goods and personal effects of military and civilian personnel between Pacific coast and Alaska tobacco from Greece Turkey and Syria to North Atlantic ports general cargo from Hawaii to Far East b 5 joint service agree ments c 3 terminal agreements d 55 agreements between foreign freight forwarders including a conference agreement between Pacific coast forwarders for the stated purpose of promoting sound ethical and honorable dealings and practices between them selves and between themselves and exporters and common carriers by water and e an agreement relating to coffee shipments from Brazil to Atlantic and Gulf ports which was entered into to prevent instabil ity in the rate structure in that trade The Board on its own motion instituted an investigation with respect to the status of express companies trucklines and other non

37 vessel carriers and the lawfulness of agreements filed under Section 15 Shipping Act 1916 in which any of said classes of carriers are parties The purpose of the investigation is to determine whether such carriers are entitled to the status of common carriers by water if not and a need for such arrangements is shown to exist enabling legislation may be sought Freight foreign A total of 28284 rate filings covering freight and passengers in the foreign trade of the United States were received representing an increase of nearly 4000 over the previous fiscal year Examinations were made for ambiguities in tariff descriptions and classifications which lead to improper rate applications and for potentially dis criminatory rates and conditions and other unlawful tariff practices There were increases in freight rates ranging from 5 to 20 percent thereofin most trades with increased operating costs being cited in support The closing of the Suez Canal in early November necessitated alternate routing by those carriers whose normal route was via the Canal causing increased operating costs with resulting freight rate increases of 15 to 20 percent These increases have been eliminated or were substantially reduced upon reopening of the Canal during the latter half of the fiscal year The Federal Maritime Board on its own motion instituted an investigation with respect to a misclassification of empty glassware transported from the United States to Venezuela and b the matter of absorption or equalization of inland freight charges in connection with the transportation by water of explosives from United States Pacific to Far East and west coast South and Central Africa Freight United States Territories and possessions Freight and passenger rate filings totaled 1671 of which 18 car riers filed tariffs embracing 27 new services and covering rates for the water transportation of household goods and personal effects by highway motor carriers between points in the United States and its Territories Upon showings of good cause the Board approved 43 special permission applications to establish rates and rate changes on less than statutory notice Carriers in the trade between Atlantic Gulf and Pacific ports and Hawaii filed new tariffs to become effective January 26 1957 re flecting increases ranging from 13 to 15 percent in practically all rates The Board instituted an investigation into the lawfulness of such rates suspended same until May 26 1957 but in view of apparent financial needs authorized the carriers to publish interim increases amounting to 72 percent of the increases proposed pending its findings in such proceeding The Atlantic and GulfPuerto Rico Conference filed new tariffs to become effective January 5 1957 reflecting increases in all rates 38 ranging from 15 to 125 percent depending upon the commodity The Board on its own motion instituted an investigation into the law fulness of such rates and authorized increases of not more than 15 percent of the then current rates or 6 cents per cubic foot or 12 cents per 100 pounds pending its finding in such proceeding subject to agreement by the carriers to make adjustment to shippers of any rates collected in excess of the Boards final findings for the period January 9 to May 51957

Terminals A total of 2033 tariff schedules were received and examined for compliance with formal rulings of the Federal Maritime Board court decisions and shipping laws The Board on its own motion instituted an investigation to de termine whether the charges regulations and practices of terminal operators at Atlantic and Gulf ports are just and reasonable within the meaning of Section 17 Shipping Act 1916 and not in violation of Section 15 Shipping Act 1916 The Board also instituted a rulemaking proceeding for the purpose of prescribing uniform defi nitions of terminal services offered by all persons carrying on the business of furnishing wharfage dock warehouse or other terminal facilities in connection with a common carrier by water at Atlantic and Gulf ports Further the Board instituted investigations to de termine a whether the rates charges rules and regulations set forth in a tariff adopted by terminal operators for truck loading and unloading waterborne freight in the port of New York area are detrimental to the commerce of the United States b whether the practices resulting from the adoption of said tariff are in violation of Section 17 Shipping Act 1916 and c whether the modification of the agreement of said terminal operators to authorize the promul gation in the tariff of rules regulations and practices prohibiting the loading andor unloading of trucks at piers or other waterfront terminals in the port of New York area by anyone other than the operators of said piers or waterfront terminals is in violation of Sections 15 16 and 17 Shipping Act 1916 The Board granted petition of Northwest Marine Terminal Asso ciation for reargument and reconsideration of its report and order in the proceeding involving the terminal rate structure Pacific North west ports but only for the purpose of clarifying that portion which held that terminal charges should be assessed against the party who was to bear them under the contract of affreightment with the carrier

Freight forwarders Certificates of registration were issued to 141 new registrants and certificates of 75 registrants were canceled making a total of 1567 registrants holding certificates issued pursuant to General Order 72 Twentyone informal complaints relative to ocean freight forwarding were handled During the year the provisions of General Order 70

39 were revoked with respect to the registration of forwarders for the movement of Government cargoes however with this revocation a statement of policy was issued which indicated the Maritime Admin istration would continue to provide a list of United States citizen forwarders to other Government agencies as required There were 550 forwarders in the list at the close of the fiscal year Significant among the freight forwarder agreements filed for ap proval was an agreement among 61 freight forwarders providing for the creation of a conference for the stated purpose of providing a means of establishing charges to be assessed by ocean freight for warders in connection with shipments moving via the port of New York and to foster sound ethical and honorable dealings and prac tices between themselves and between themselves and exporters and common carriers by water Such conference agreement is similar to the Pacific coast forwarders agreement among 20 freight for warders approved by the Board during the fiscal year Investigation of forwarders who may be acting as dummies for shippers or who have been otherwise obtaining brokerage unlawfully was continued Four cases involving apparent violations were docketed for formal hearing and decision and others are in process of preparation The Federal Maritime Board issued proposed revised rules and regulations under General Order 72 relating to the business practices of freight forwarders for comment of interested parties In pre paring these rules and regulations the Board took into consideration the recommendations made by the Mouse Committee on Merchant Marine and Fisheries in its report on investigation of foreign freight forwarders and brokers dated July 26 1956 as well as information developed through the Boards own inquiries Proceedings Before Hearing Examiners At the beginning of the fiscal year 48 complaints or other proceed ings were pending During the fiscal year 1957 29 regulatory 14 subsidy and 16 charter or miscellaneous cases were filed or reopened a total of 59 cases The examiners conducted 35 hearings and issued 27 recommended andor initial decisions The Board andor Ad ministrator heard oral argument in 12 cases and issued final reports in 27 cases Final orders were issued by the Board andor Adminis trator in 11 cases without hearing and report

Final decisions of the Board andor Administrator Docket No 723 Portland Oregon and Seattle Washington v Pacific West bound Conference dmerican Hatoaiian Steamship Company et al Scheduled steamship services found inadequate for shipment of explosives from Puget Sound direct to Philippines but such traffic would be adequately served by a proposed monthly direct service Equalization on explosives permitted to meet special needs of shippers when direct sailings are not available Boards prior report and order modified to accord with above findings

ME Docket No 758 American Union Transport Inc v River Plate Brazil Conference and Member Lines Respondents found to have violated Section 15 Shipping Act 1916 in failing to file with the Board for approval an agree ment prohibiting payment of brokerage on locomotives shipped from New York N Y to Rio de Janeiro Brazil Complainant not entitled to reparation as brokerage was not earned by complainant and such payment would result in an indirect rebate to the consignee in violation of Section 16 Shipping Act 1916 There was pending before the United States Court for the District of Columbia a suit for review of the Boards order Docket No 767Agreement and Practices Pertaining to Brokerage Pacific Coast European Conference Rule in respondents tariff prohibiting payment of brokerage to any broker who solicits for or receives brokerage from a non conference line competitor found unjustly discriminatory and unfair as between carriers and shippers and detrimental to the commerce of the United States Docket No 771 Banana Distributors Inc v Grace Lime Inc and Docket No 775 Arthur Schwartz v Grace Line Inc Respondent found to be a common carrier of bananas and the contracting of all of its refrigerated space to three shippers to the exclusion of all others found to be unjustly discriminatory in violation of Sections 14 and 16 Shipping Act 1916 Forward booking arrange ments for 2year periods under which refrigerated space would be equitably prorated among existing shippers complainants and their supporting inter veners would be consistent with common carriage and not unjustly discriminatory Docket No 772 United States Atlantic GulfPuerto Rico Conference et al v American Union Transport Inc and Docket No 784 American Union Transport Inc v United States Atlantic GulfPuerto Rico Conference et al American Union Transport Inc found to be a common carrier of property between United States North Atlantic ports and Puerto Rico ports Its Tariff FbIBF No 1 failed to reflect the obligations of a common carrier required by Section 18 Shipping Act 1916 or Section 2 Intercoastal Shipping Act 1933 Alleged agreement under Section 15 Shipping Act 1916 not shown to exist Docket No 790Encinal Terminals et al v Pacific Westbound Conference et al Conference action preventing common carriers from serving complainant ports at the same rates as San Francisco found to result in violation of Section 205 Merchant Marine Act 1936 Docket No 792 Agreement and Practices Pertaining to Limitation on MembershipPacific Coast European Conference Agreement to impose con dition on admission to conference membership that applicant withdraw from litigation before the Board in which applicants position is opposed to position of conference found to be a new agreement or modification to an agreement effectuated prior to approval in violation of Section 15 Shipping Act 1916 Docket No 552American President Lines Ltd Application for Permis sion Under Sections 805 a and 605 c Merchant Marine Act 1936 To Call Its Transpacific Vessels at Hawaii and Docket No S55Pacific Far East Line IncApplication for Permission Under Section 805 a Merchant Ma rive Act 1936 To Call Its Transpacific Vessels at Hawaii American President Lines withdrew its application subsequent to hearing To permit Pacific Far East Line Inc to carry cargoes between ports in Hawaii and ports in Cali fornia Oregon and Washington on unsubsidized transpacific voyages with cargo vessels would result in unfair competition to an operator engaged ex clusively in the coastwise or intercoastal service and would be prejudicial to the objects and policy of the Merchant Marine Act 1936 Application denied There was pending before the United States Court for the District of Columbia a suit for review of the Boards action Docket No 556States Steamship CompanyApplication for Operating Differential Subsidy in the U S Pacific CoastFar East Service Section 605 c Merchant Marine Act 1936 does not interpose a bar to the granting of an operating differential subsidy contract to States Steamship Co for the operation of cargo vessels beween Pacific coast and Far East and Pacific North west and Far East

41 The Federal Maritime Board recommended that the following applications to charter Governmentowned vessels be granted after it made the following findings and certifications to the Secretary of Commerce pursuant to Public Law 591 Slat Congress that the services were required in the public interest that such services were not adequately served and that privately owned United Statesflag vessels were not available for charter from private operators on reasonable conditions and at reasonable rates for use in such services Docket No M69Marine Transport Lines Inc et alApplications to Bare boat Charter GovernmentOwned Vessels from 15 companies for bareboat charter of 87 dry cargo vessels for use in worldwide trade for the carriage of International Cooperation Administration and other Government sponsored cargoes Docket No M69 Sub 1PaeiLec Far East Line IncApplication to Bareboat Charter Two VictoryType Vessels for 1 voyage each to carry wheat from the Pacific Northwest to Pakistan beginning in July 1956 Docket No M69 Sub 2Pacific Far East Line Inc et alApplications to Bareboat Charter Vessels for Carriage of Bulk Cargoes GovernmentSponsored and for Others for 30 vessels for carriage of outbound Governmentsponsored bulk cargoes for foreign aid and other approved bulk cargoes in the transpacific trade Docket No M69 Sub 3American Export Lines Inc et alAppli cations to Bareboat Charter Vessels for Carriage of Government Sponsored Bulk Cargoes not to exceed 40 vessels for carriage of Government perishable bulk cargoes outbound for aid programs Docket No M70American Coal Ship ping DwApplication to Charter 80 LibertyType Dry Cargo Vessels for Carriage of American Coal for use in worldwide trade principally to carry American produced coal and other bulk cargoes to foreign ports Docket No M71Grace Line IncApplication to Bareboat Charter Two Victory Vessels for Operation on Trade Route No 25 Service B Docket No M72Ishrandtsen Company Inc et alApplications to Bareboat Charter Government Vessels for use in worldwide bulk commodity trade principally for the carriage of coal to foreign ports and other bulk cargo Docket No M73States Steamship CompanyApplication to Bareboat Charter One VictoryType Dry Cargo Vessel for Operation on Trade Routes Nos 2990 Docket No M74Lykes Bros Steamship Co Inc et alApplication to Bareboat Charter Dry Cargo Vessels for Operation in Berth Services Docket No M75 Coastwise LineAppli cation to Charter One GovernmentOmmd Vessel to operate for a period of 1 year between California Pacific Northwest British Columbia and Alaska Docket No M76Terminal Steamship Company Inc Application to Bare boat Charter One LibertyType DryCargo Vessel to be operated for 1 year for carrying sulfur from United States ports on the Gulf of Mexico to ports in the Pacific Northwest and lumber from Pacific Northwest to North Atlantic ports Docket No M77 Sub 1Isthmian Lines IncApplication to Bare boat Charter 8 WarBuilt DryCargo Vessels to be operated interchangeably in berth services AtlanticGulfIndia Pakistan and Ceylon and AtlanticGulf Persian Gulf Docket No M78Grace Line Inc et alApplication to Bareboat Charter DryCargo Vessels Vessels chartered on an interim basis of the N3SA2 type for employment in general cargo carriage between ports of the Great Lakes and the Caribbean area and the United Kingdom and continent of Europe Docket No M79Grace Line IncApplication to Bareboat Charter DryCargo Vessel application to shift the chartered ship Cuba Victory from Line B Trade Route 25 for unsubsidized operation on Line A Trade Route 2 Docket No M77Prudential Steamship Corporation et alApplications to Bareboat Charter DryCargo Vessels All applications except West Coast Steamship Co Mathiasen Steamship Corp Pope R Talbot Inc and Missis sippi Shipping Co Inc were withdrawn due to changed conditions The record established that under changed conditions there was no need for additional ships and the pending applications were denied Recommended decisions of hearing examiners Docket No 785D J Roach Inc V Albany Port District Port District Commission and Cargill Inc Employment by Cargill Inc of a competitor M as the sole supplier of labor for stevedoring services at the public grain termi nal facility in the port of Albany N Y found not to be in violation of Sections 15 16 1 and 17 Shipping Act 1916 Complainant not shown to have been legally injured and not entitled to reparation Docket No 788 A8sociated Banning Company et al v Matson Navigation Company et al Docket No 796 Howard Terminal v Matson Navigation Com pany et al and Docket No 798In the Matter of Agreement No 8095 Between the City of Oakland and Encinal Terminals and Agreement No 8095A Between Encinal Terminals and MatcinaZ Corporation These related proceedings were consolidated for hearing and report Involved were agreement between Matson Navigation Co and Encinal Terminals for formation of Matcinal Corp agree ment between Encinal Terminals and port of Oakland and agreement between Howard Terminals and port of Oakland all of which were found to have been carried out in whole or in part before approval of the Board in violation of Section 15 Shipping Act 1916 Sections 14 1 16 17 and 20 of the Shipping Act 1916 as amended not shown to be violated as alleged Docket No 793 Alaska Freight Lines incProposed Revised Tariff and Docket No 793 Sub 1Alaska Freight Lines IncTariff F M BF No 4 and Southbound Rates Tariff of Alaska Freight Lines Inc found not to be violative except in two particulars of either Section 16 or 18 Shipping Act 1916 Docket No 795In the Matter of Agreement and the Statement by the Great Lakes BordeauxHamburg Range Westbound Conference Filed Pursuant to Section 2363 of General Order 76 Approval of agreement between members of the Great Lakes BordeauxHamburg Range Westbound Conference to initiate an exclusive patronage contractnoncontract rate system should be denied under Section 15 Shipping Act 1916 as unjustly discriminatory and unfair as between shippers and carriers and detrimental to commerce of the United States Docket No 808 Pacific CoastHawaii and AtlanticGulfHawaii General Increase in Rates General rate increase in the PacificAtlanticGulfHawaii trades found not to be unlawful except as to canned pineapple and canned pineapple juice from Hawaii to the Pacific coast Docket No SteilAmerican President Lines Ltd and Lykes Bros Steamship CoAgreement Apportionment of Rubber Shipments Originating in Sion Continuation by these two United Statesflag carriers as parties to an agree ment providing for apportionment of rubber shipments originating in Siam and destined to United States Atlantic and Gulf ports not shown to contravene the purposes policies or provisions of the Merchant Marine Act 1936 Pending proceedings At the close of the fiscal year there were 72 pending proceedings of which 22 were initiated on the Federal Maritime Boards own motion and the re mainder were instituted by conferences trade associations shippers individual steamship operators and others International Maritime Affairs The eighth meeting of the Planning Board for Ocean Shipping of the North Atlantic Treaty Organization was held in Washington during October 1956 The Maritime Administrator as United States representative on the Planning Board served as chairman of the meeting which was attended by maritime representatives of all the NATO governments The Board set up a Special Dorking Group to evaluate international mobilization planning already accomplished and to make recommendations to the Board for further action The

M Maritime Administration was represented at these working group meetings held in London in February and May 1957 The Maritime Administrator as Washington chairman of PBOS attended a meet ing of the Senior Civil Emergency Planning Committee of NATO held in Paris January 1957 The Maritime Administration in consultation with the Depart ment of State and other interested Government agencies participated in the preparation of United States positions on maritime matters included on the agenda of the Transport and Communications Com mission of the United Nations which met in New York January 1957 A member of the staff was designated as the United States repre sentative on an Ad Hoc Committee of Specialists to study the existing system of freight and insurance rates within the American Republics This committee set up by the Inter American Economic and Social Council in November 1955 completed its work by May 1957 and issued a report with recommendations for consideration by the member governments of the council A Technical Maritime Conference was convened in London in September 1956 under the auspices of the International Labor Or ganization to consider recommendations to the ILO concerning va rious matters affecting seamen The United States delegation on which the agency was represented consisted of personnel from the fields of Government labor and shipowners The Maritime Administration continued to work closely with the Department of State in providing supervision and instructional pro grams for foreign nationals training in this country as United Nations fellows or trainees of the International Cooperation Admin istration Programs were developed with Federal agencies and in dustry to provide the best possible experience for foreign trainees responsible for maritime policies and operations in their respective national governments In addition there was continued cooperation with the Department of State in negotiations with foreign govern ments on foreign actions deemed to be discriminatory against United States shipping

M FINANCIAL STATEMENTS tLU W q2 C

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m Exhibit 2 FEDERAL MARITIME BOARD AND MARITIME ADMINISTRATION DEPARTMENT OF COMMERCE Statement of Operations for the Year Ended June 30 1957 and 1956 YEAR ENDED JUNE M

CURRENT YEAR OPERATIONS 1DSI 1956 Operating activities Revcnuas and reimbursements Operations of National Shipping Authority 24129918 26300332 Chartering of vessels to others all chartering after 63056 included in operations of National Shipping Authority 1 132947 Maintenance of reserve fleet vessels 1117290 1924728 Maritime training program 13 fS1 OpemLOn of warehouses 15179 53230 Maintenance 45750 of reserve shipyards 277244 270215 Total revenues and reimbursements 25521413 30198151 Costs and expenses Operations of National Shipping Authority 45487318 23136675 Chartering of vessels to others all chartering after 63056 included in operations of National Shipping Authority 8267 Maintenance of reserve fleet vessels 8246477 8429535 Maritime training program 2946043 2857265 Operation of warehouses 66@896 648059 Maintenance of reserve shipyards 662747 615217 Total costs and expenses 58 35695013 Net rite and expenses income Operations of National Shipping Authority 21 357 400 3172657 Chartering of vessels to others all chartering after 63056 included in operations of National Shipping Authority 1624680 Maintenance of reserve fleet vessels 7129137 6504807 Maritime training protonm 2932362 842086 Operation ofmabouses 612616 602309 Maintenance of reserve shipyards 455503 345002 Total net costs and expenses 32487068 5496867 Direct subsidies and cost of national defense features Estimated operating differential subsidies note 6 129831753 140640664 Adjustment of estimated recapturable subsidies 23309512 27239272

1N 722 241 differential subsidies 15982405 Cost national featu e 17 496 769 113 401 392 st of naion defenseeatures 377350 653970 124 590360 130 037 767 Excess of recorded cast of vessels sold over proceeds of sale and vessels lost and abandoned 62146214 68091680

Administrative expensesamount allocated to N S A excluded 7173554 6923061 Cost of repairing reserve fleet vessels 544851 10 Other income and adjustments incame Interest earned on notes and mortgages receivable 9847066 9331507 Inventory and other property adjustments 1024223 59878 Loss on sale of surplus material and scrap 378466 470499 Loss on fixed assets other than vessels sold abandoned or scrapped 2536121 721104 Net income from War Risk Insurance Program 143678 39857 Premiums and fees on insured ship mortgages 340329 91489 Misce llaneous 00131 332040

8350579 79N 128 Net cost of current year operations note 4 21 212817317 ADIUSTMENTS APPLICABLE TO PRIOR YEARS Not charges arum from adjustments and settlements related principally to World War IIactivities 1046303 19022703 Participation in protsoWorld War Il insurance syndicates 294025 7250011

752278 18 297 703

NET COST OF OPERATIONS note 4 219349746 M3111 See are a on schedule 1 e Includes reconstruction differential subsidy of 1117694 and 1436866 The notes to financial statements are an integral part of this statement

48 Exhibit 3

FEDERAL MARITIME BOARD AND MARITIME ADMINISTRATION DEPARTMENT OF COMMERCE Statement of Equity of the United States Government for the Years Ended June 30 1957 and 1956 YEAR ENDED JUNE 30

1857 1956

4 961 859 271 5135237965 BALANCE BEGINNING OF

242910000 250170600 2 vessels transle r 1957 and 6 vess 12 861 672 16942 648 nears to Babok 2894275 6009850 Letunds apprOJlriah lbligations incur nn Pnor to Janu 2 946875 21 653146 ials and supphe Department of ahm exclusive c 956 which were I 399869 1440366 at obligations frt 343014 155116 d received from 43814 179998

137395 d toward the construction o a Cbapll at the bent Marine Academy Kings Point N Y 38778 6345 vessels transferred to t m Department of the Navy 9032 575 years 262 347 329 296 695 839 5 224 206 600 5 431 933 804

219 340 746 231115 020

100182 070 114 226 837 year1 956 cost of 12 vessels transferred to the Department of the Navy year 1957 and 45 vessels in fiscal year 1956 46 335 662 120 905 460 cost of 5 vessels transferred to the Department of the Air 0 904045 loans receivable transferred to the Iepartment of Justico 1 933 502 sf sbfp sales in foreign areas deposited in Treasury symbol 903681

State 728 374 764627 rred to State and 24692D 783912 h as endandvesselssparebypartste 347175

377650498 470074533 4846556 4961859 BALANCE CLOSE OF

14 Exhibit 4 FEDERAL MARITIME BOARD AND MARITIME ADMINISTRATION DEPARTMENT OF COMMERCE Statement of Sources and Application of Funds for the Year Ended June 30 1957 SOURCESFunds appropriated by the Congress Proceeds from the sale of vessels owned 242 910 000 Collections on mortgage loans receivable 79908382 Funds provided by the Secrets of the Treasury tor liquidation of obligatio ns fneurred 56970999 against funds of the War Shipplug Administration prior to January 11947 284G 875 Funds provided from lapsed appropriations for payment of prior year obligations 343014 Proceeds from sale of Seed assets other than vessels 102759 Materials supplies and accounts receivable transferred from other U S Government agenciesnet 42481 Contributions received for construction of Chapel 38778 Total funds provided

APPLICATION Net cost of operations per Statement Of Operations 219349746 Items Considered in net cost of operatfmLS Loss on sale of vessels 62146214 Loss on fixed assets other than vessels sold abandoned or serapped 2536 1 Loss from adjustment of vessel sales in prior years 150055 159 57 353 Funds 100 142070 Payments into General FundloansUre ei Treasury 514993351499335 ExpendfExpendituresapplied tor mortgagevessels owned and under co 383 68 542 Expenditures for landmobilizationinventoriesofand site development structuresstructuaidsuppliesasnonand equipmentcuincludingassetscon 33326572 struction in progress 1643627 Proceeds of ship sales In foreign areas deposited in Treasury symbol 2OFT3186 903681 Unobligated balance of appropriations transferred to U S Treasury 728374 Increase in working Capital during the year per summary below 1773184 Total funds applied Summary of Changes in Working Capital CHANGES IN WORKING YEAR ENDED JUNE 30 CAPITAL

1957 1958 Zrzcreae Decreae ASSETSCash 287164708 266079393 21085315 15381658 19377038 3995340 Accrued interest Notes and accounts receivable 3109082 2978497 2C7 585 Agentsadvances 143694 545539 401845 Material and supplies 8192355 42063313 33870956 Other assets 1 3434769 1962980 Total 315463268 334408549

LTATILIT1EaAccounts payable and other liabilities 241729789 260875449 19145650 Reserves 6286679 7643217 1256538 Net untermfnated 11238 327487 316249 248027706 268746153

WORKING OAPITAL 67435580 65

Increase in working capital 1773184

42 OOP 347 42 00437

50 FEDERAL MARITIME BOARD AND MARITIME ADMINISTRATION DEPARTMENT OF COMMERCE Notes to Financial StatementsJune 30 1957 and 1956 The balance sheets and the statements of operations include transactions recorded e accounts of certain steamship companies which operated vessels for the Adminis mmunder GeneralrAgencI IAagreementsheen fonds in connection with any notes or accounts re the followinSamounts with respect omortgages which had been declared in default on or before that date Nun6ervessels of Mortgagebaiamrz Acerinterest 2 Domestic 47I 150 20913 5 1517813 692698 Foreign 7 198963 713611 Total

3 Inventories of materials and supplies are valued at stock catalog prices which repre sent cost or estimated cost to the Administration No consideration was given to the physical condition of the inventories in establishing these prices A change in accounting policy was made during the current fiscal year with respect to materials and 9supplies

time Administration in time of war or otner counting practices of noncorporate Federal de an allowance for depreciation of vessels o sales of fixed assets this practice results other current year operations the recorded have been the case had depreciation been at June 30 1057 are seven vessels with at June 30 1056 one vessel with accrued been delivered to the Department of the sferred when total actual construction costs uable to each subsidized operator are de

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51 Schedule 1 FEDERAL MARITIME BOARD AND MARITIME ADMINISTRATION DEPARTMENT OF COMMERCE

Statement of Operations of National Shipping Authorityfor the Years Ended June 30 1957 and 1956

YEAR ENDED TUNE 30

SMITING OPERATIONS 1957 1956 Vessels operated by general agents Terminated voyage results terminated voyages 157 1957 134 1056 Revenue 12025611 15865874 Expenses 11775063 14410002

Gross profit from vessel operations 250548 1 455872 Chartering of vessels to others 7900572 3297563

Total gross income from shipping operations 8151120 4753435 NONSHIPPINO OPERATIONS Vessel reactiv Lion Costs a 32105750 6500258 Vessel deactivation costs expense ofrestoring vessels to theresove fleet 152695 527399 Miscellaneous expenses 216175 878549

32 474 620 7 906 206

LessReimbursement of vessel reactivation costs 3360570 6162233 Reimbursement of vessel deactivation costs 152 695 527530 Miscellaneous Income 690470 456

4203735 7145 895

Net cost of norodupping operations 28270845 760311

20119765 3993124 ADMINISTRATIyE EYPENSES 1237635 820467 NET INIRELowFRou OPERATIONS 21357400 3172657

o Excludes 3840421 transferred to General Fund Receipts Symbol 13173417 to cover charter hire receipts determined to have been erroneously deposited to the Vessel Operations Revolving Fund during the fiscal years 1952 to 1956 It is believed that a substantial Portion of the vessel reactivation costs which were incurred to alleviate

52 Schedule 2

FEDERAL MARITIME BOARD AND MARITIME ADMINISTRATION

DEPARTMENT OF COMMERCE

Statement of Operations of National Shipping Authority Front Inception to June 30 1457

Vessels operated by general agents International Military Sea Chartering Cooperation Transpnrta Aiirella of vessel Total Ad7ninalration Lion Seraire nova Total to others SnIPPINO OPERA

TIONSRevenue 436526632 192197429 190342639 2545328 385085306 51441236 Expenses 357189586 171846409 184177050 971321 356994783 19

Gross income from ship ping opera throw 79337047 20351020 6165589 1574004 28090613 51246434 NoNsmrPlNuOPERATIONSVessel reictiva ticn costs 140 669 716 78 209 031 29109 674 550003 107 958 708 32 731 008 Vessel deactiva tion costs ex pense of rester in vessels to the reserve fleet 16812327 7942594 8419020 247807 16609421 202906 Miscellaneousexpenses 2386622 261026 793636 525862 1580524 806098 159 888 665 86 412 651 88412 330 1323672 126148 653 33 740 012 LESSReimbursement of vessel to

activationcosts 78680302 48102578 27827042 75989620 e2690682 Reimbursement of vessel deac tivationcosts 8420533 8420533 8420533

Nonslimpingincome X15839595 7178313 5166263 205221 12139385 3700210 102 010 430 55 310 921 41 413833 205221 96 519 533 6390892 Net costmcome of nonship pingtionsopera 56948235 31071730 3001508 1528893 29599115 27349120 22 388 812 10 720 710 9167 097 45111 1608502 23 897 314 ADMINISTRATIVEEXPENSES tenta tive proration 10164 607 3164 511 5601070 94070 8862651 1301956

NET INCOUE loss Fruit OPERA recent 122242 e121 03563027 48959 10371153 22595358

Vessel reactivation costs applicable to vessels chartered to others include all vessel repair expenses not chargeable to charterers See note to schedule 1 The acute tanker shortage caused by the closing of the Snez Canal resulted in the reactivation of 12 tankers that were transferred to the Navy Department on a custody art angement Under thus arrangement the Navy Department reimburses the Maritime Admmtstr Don for one twelfth 112 of the reactivation costs 4826713 for each month the tankers are in the custody of the Navy until either the costs are recovered or the tankers returned to the Infuse Administration Credits for materials and equipment unnoved from vessels and returned to wmehouses are reflected in no rshipping mcome at standard catalog prices which are greatly in excess of amounts realized upon ties post tiou a Net loss from operations for account of International Cooperation Administration resulted from the program being terminated on such an Scaly date that revenues from shppmg services mere not sufficient to amortize Shin ieactnation and other expenses The Comptroller General of the tinned States In a

agreement

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57 APPENDIX C Summary of OperatingDifferential Subsidy Agreements as of June 30 1957

Number of ships assigned on June 30 1957 Expiration Name of operator date of agreement Pwsen

gercombiand Cargo nation

Amencan Banner Lines Inet Dec 311977 0 American Export Lines Inc cc 311945 6 2f4 American Mail Line Ltd Dec 311960 American President Lines Ltd Dec 311978 S 16 Bloomfield Steamship Co Dec 311963 4 Farrell Lines Inc Dec 311959 2 14 Grace Line Inc Dec 311977 11 16 Gulf R So American Steamship Co Inc Dec 311963 4 Lykes Bros Steamship Co Inc Dec 311957 54 Mississippi Shipping Co Inc Dec at 1957 3 11 Moore McCormack Lines Inc Dec 311077 2 43 The Oceamc Steamship Co Dee 311972 2 4 Pacific Per East Line Inn 1e c 311962 9 Pacific Transport Lines Inc Dee 311962 5 United States Lines Co Cargo Service Dec 31 1906 54 SS AMP RICA 1 S6 UNITED STATES I JuneAug 19196711954 1

1 One Mariner vessel now being converted to a combination vessel will commence operation during the first half of 1958 upon delivery by the shipbuilder

APPENDIX D

Ships Approved for Transfer to Alien Ownership andor Registry and Flag Fiscal Year 1957

Number I Totaltonnagegross I Averageage

PRIVATELY OWNED

Ships under 1000 gross tons Commercial craft tugs barges etc 484 99007 59 Pleasure craft love 5 tons 127 2991 67 Undocumented motorboats 5 tons and less 411 2055 3

1022 104 963 42

tons and over 53 499773 132 45 298124 143 3 16877 440 11 33869 116

36 1 671 IN

148 252 1

GOVERNMENT OWNED Cargo ships 16 11 781 12

Grand 164 2633824 109

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61 APPENDIX G

Cash and Approved Securities on Deposit in the Statutory Capital and Special Reserve Funds of Sul 4diaed Operators as of June 30 1957

Operator Capitalreservefunds reserveSporesfunds Total

American Export Lines Ina 13487350 6165695 19653045 American Mail Line Ltd 4546393 5610971 10158864 American President Lines Ltd 1908606 4001452 5910058 Farrell Lines Ina 3 837447 4645847 8483294 Grace Line Inc 19826273 13701531 33527804 Gulf South American 3teamsbip CO Inc 627541 1671727 2299268 Lykes Bros Steamsbip CO Inc 53794741 30090004 83884745 MissisprMooreMcCormackShippingLinesCO IncInc 47833089494545 161015183658356 255060638441664 Ocesoie Steamship Co The 444404 1436232 1880636 Pacific Argentine Brand Line Inc t 242736 150023 392759 Pacific Far East Line Inc 1261 153 1278610 2539763 Pacific Transport Lines Inc 15087 218239 233326 Seas Shipping Co Inc 9 6494307 2499428 8993735 United States Lmes CO 3339938 6680178 10020116

Total 124105829 97909311 222015140

I Operating Differential Subsidy Agreement terminated on December 31 1956 Operating Differential Subsidy Agreement terminated on the date of termination of the last voyage in progress on April 30 1957 NOTEAccrued mandatory deposits applicable to the resumption period generally Jan 1 1947 to Dec 31 1956 not included in the above amount to approximately 27297720 comprised of 5082886 applicable to tie capital reserve funds depreciation and 22214834 applicable to the special reserve funds excess profits

62 V a 6ovEFXNEXi eFIeVX OIrle 1968